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                  Office of the Press Secretary
                          (Tokyo, Japan)
For Immediate Release                          July 10, 1993     
                          PRESS BRIEFING
                  ON THE U.S.-JAPANESE AGREEMENT
                           Hotel Okura
                           Tokyo, Japan

10:41 A.M. (L)

MR. GERGEN: The four briefers are Bo Cutter, Charlene Barshefsky, Joan Spero and Roger Altman. All of them were mentioned, as you know, by the President earlier in the statement. Bo Cutter is going to -- and Larry Summers is also here and will be going on with us to Seoul. As you know, the press plane has been delayed. You know all those details.

Bo Cutter is going to speak first, and then he and others will be available for your questions.

MR. CUTTER: This is going to be a briefing that is true to its name, given how the five of us feel. Let me introduce the members of the team, just so you know who they are. Roger Altman, Charlene Barshefsky, Larry Summers, Joan Spero. And Alan Blinder of the CEA has been along as an observer. He's not yet confirmed, so he couldn't be part of the negotiations.

The principal things that I want to do are describe what we did and then make some points about what we did. What the framework consists of I'd like to describe in three points. First of all is it constitutes an overall, as the President called it, basic bargain about the macroeconomy. It brings together what we've characterized in the discussions and in public as the two major imbalances in the world economy. One is the U.S. budget deficit, which President Clinton has focused on since the beginning of his term, and the progress with respect to which has allowed him to come to the summit and has allowed us to be in these negotiations with substantial clout. And the second is the current account surplus of the Japanese economy.

And, essentially, at the macroeconomic level, what the basic agreement is, is that we will persevere successfully with respect to the reductions in the budget deficit that we've already moved forward with, and the Japanese government will move toward an economic policy that is focused on consumer-led growth and that will produce, will yield a highly significant reduction in the current account surplus. The result of that will be a significant increase in imports for the world at large.

That's point one, is the basic macroeconomic trade. Point two is the focus on individual parts of the economy -- on sectors and on structural areas. And there, what we've done is the following:

We have, in the famous five baskets that you've all heard about before, which is: procurement, businesses and products; regulated businesses; what we've called "major sectors" which the specific one, identified as automotive; a compliance basket which brings together all of the areas in which there have been arrangements in the past; and what we've called the integrated basket, which brings together a series of issues like foreign direct investment, intellectual property, buy-seller relationships -- that in each of those areas, there will be a focus using objective criteria, which specifically by the agreement will be both quantitative and qualitative and will be used to assess progress.

So we brought together at the microeconomic level specific sectors in structural areas and specific objective criteria. That is the first time that has ever been accomplished in a framework negotiation of this kind.

The final point that is integral to this whole framework is the establishment of a schedule and of timetables. The process will be driven by two meetings a year of the two heads of government. Those meetings will be preceded by meetings at the deputy level. Specific agreements are scheduled for six months from now. And that process is intended to be driven.

Let me make the following points about the framework, and then we'll open to questions briefly. The first is -- and the President underlined this; all of us would like to underline it also -- that the framework presents the rules of the game, not the game. It's a start. The rules matter. They set the preconditions for a fairer and more rigorous competition. And if we persevere, if we manage this correctly, if we stay with it, results will flow from it. But it depends upon our perseverance.

The second is that this framework or the results that will flow from it, in our judgment, benefit everyone -- the American workers, the Japanese consumers, other nations, and the global economy. Everything in this framework is on a multilateral most favored nation basis.

The third, as I've already said, is that the framework focuses on results, on objective criteria, on quantitative and qualitative measures and on an ongoing review of programs.

The fourth is that it is a fair deal and an equitable deal. It's fair for both sides and it's a good balance of the equities that were involved in the negotiations.

And the final point, as the President and the Prime Minister concluded, is that in our view it presents the right direction for the U.S.-Japan relationship. As we've argued for some time, it's the most important bilateral relationship in the world. It is one where the economic aspects of which need attention and fixing. We feel that we have created a balanced and an equitable framework which allows that to occur over the years to come.

Thanks. Roger Altman is going to follow me with a brief statement.

MR. ALTMAN: Well, a lot of you are already asking who won and who lost here, and I want to address myself for a moment to that.

Our position, first of all, is that both sides win because it's good for American workers, it's good for Japanese consumers and it's good for both nations.

But to be more specific than that, we wanted to establish on the industrial side of this equation, the micro side, a results-based approach using measurements and quantitative measurements. As most of you know, that's an approach which Japan has not chosen to embrace to date over many discussions, involving many administrations. That approach for the first time in any trade agreement is in this deal.

We also wanted the maximum commitment on reducing their external imbalances, their current account surplus, and increasing the import penetration of their market on behalf of foreign goods and services. They have made a commitment to make -- to get highly significant reductions in the current account imbalance and highly significant increases in import penetration.

As far as the external account is concerned, we interpret that to mean a return to the historical norms over the past 20 years, which are in the vicinity of 1.5 to 2 percent of their GDP.

So, from our point of view, we got what was paramount on the industrial side or the micro side, and we ended up quite a bit better on the macro side than the lay of the land, say, a month ago. The language is stronger than the G-7 communique and stronger than we've had since we took office. And on that very basic two way test we feel quite good about the outcome and about how the ledger breaks down.

I want to make one other comment about why this deal is good for America. Number one, it's the first time these principles of a results-based approach and quantitative indicators have been in an agreement. I made the point about the external imbalances. They had insisted, as you may know, that this agreement be explicitly exempted from 301, from Section 301 of our trade laws. Of course, we could not accept that, and did not.

There is a tight timetable in this agreement. The first set of agreements which cover automotive, insurance and procurement are due in six months, and all the rest of the agreements are due within one year, July '94 summit. We got a commitment that the two heads of state would meet twice a year, which obviously will keep the pressure on them. And we got five highly specific so-called "baskets," and a very specific long list of specific industries which will be the objects of these agreements.

MR. GERGEN: I just want to ask a question. Before we go on to your questions, the bus leaves here -- for those going on to Seoul, the bus leaves here at 12:15 p.m. How much time do you need, logically, to finish your stories? Our briefers are also on a tight time frame. If we went about 20 minutes, 25 minutes on this, would that be sufficient for everybody?

All right? Okay. Your questions.

Q You say that this incorporates quantitative measurements. But as I read it, there are no quantitative measurements in this deal, there is a commitment to seek quantitative measurements in the future negotiations. Is that correct?

MR. CUTTER: That's exactly right. As I said, what we've attempted to do from the beginning is create a framework. From the beginning, in every one of our public statements, we've said that's exactly what we're trying to do. What we wanted to do was set the rules that future bilateral trade relationships would be considered from a results perspective and would use objective criteria, both quantitative and qualitative measures.

MR. ALTMAN: Let's get one thing straight. This is an agreement about the rules of the game. And now we're going to get on and play the game. And in the game, we'll have quantitative indicators, which was an object of great contention, as you know, over a long period of time, and that's why this is, frankly, a victory from that point of view on our side. But this isn't the game, this is the rules of the game.

MS. BARSHEFSKY: Let me make one other comment. This is not a situation of seeking quantitative indicators. This is a situation where both sides have agreed that progress in each sectoral and structural area in each basket will be evaluated on the basis of objective criteria, which may be qualitative and they may be quantitative, or they may be both. So this is not to seek, this is an agreement that those indicators will be present in individual agreements.

Q So at a point certain in the future, you will have some objective goal for Japan to reduce this current account surplus with the world along the lines of the 1,5 percent, 2 percent you were looking for?

MR. CUTTER: No. Let me distinguish between the macroeconomic and the microeconomic side. As we've said from the beginning, at a point certain in the future, we will, sector by sector as the negotiations proceed -- and as Roger said, we've laid this out on a six-month and a year schedule -- we will have objective criteria on the sectoral and the structural issues. On the macro issues, on the current account surplus, what the government of Japan has committed to is a, "highly significant" reduction in its current account surplus.

Q The agreement says that this framework will be the principal means for addressing these issues, and that if issues arise, they'll be handled under multilateral agreements. Would you tell us whether any assurances were given, public, private, classified, unclassified, formal, informal, that the United States would not seek trade sanctions under 301?

MS. BARSHEFSKY: The agreement has no effect upon U.S. use of Section 301. That's clear from the agreement, which only requests that parties seek to consult with respect to disputes. This understanding will also be confirmed in an exchange of letters that will be publicly available. It is the only exchange of letters that will be appended to this agreement, that will be publicly available at some point next week.

Q What will the letter say?

MS. BARSHEFSKY: The letter simply indicates that Section 301 applies.

Q Mr. Cutter, two weeks ago, we were over in the embassy here in Tokyo, and you laid out specific numbers on the Japanese side and the American side; and you said -- I'll quote you -- "We have argued to the Japanese that you have a much stronger agreement for both sides if there are numeric targets in it." Do you say this is a stronger agreement or a weaker agreement, because there are no numeric targets?

MR. CUTTER: I think that this is the strongest and best framework that has been developed ever to guide these bilateral relationships.

Q I have two questions. One, what provision do you have for sanctions or resolution of differences if you don't meet the goals of the sectors? And secondly, could Mr. Summers speak to the question of why there are no quantitative targets on the macro area, something about which he's spoken quite a bit?

MR. CUTTER: Why don't I let Mr. Summers speak first and then Ms. Barshefsky will address the second point.

MR. SUMMERS: Our desire in this framework all along was to influence Japan's macroeconomic policies, to assure that the current account deficit came a long way down, and to be in a position to negotiate results-based understandings on specific sectoral areas. And we feel that we have achieved that.

The Japanese, whose current account surplus is now a little above three percent, have recognized in the G-7 communique yesterday that bringing down their current account deficit was an important goal. And they've committed to us to take the measures that are necessary to achieve highly significant reductions in that current account and in the amount of imports that the Japanese take.

You make a highly significant reduction from a number that's a little above three, you do it over a few years and you're certainly below two.

Q A two-pronged question. If you could tell us, what didn't you get that you really wanted as part of this framework agreement? And what assurances do you have that the next Japanese government will comply with the commitment undertaken by this existing Japanese government?

MR. SUMMERS: I would just say that in the macroeconomic area we're very happy that we've got a set of understandings with the Japanese that make us confident that as the cyclical developments unfold, they'll take the steps that are necessary in terms of expanding their economy to bring down that current account deficit.

As for the other question I will turn it back to Mr. Cutter.

Q Bo, could you please speak to the second part of my question?

MR. CUTTER: I'll speak to it also and then Charlene will. And I also wanted to address the point that was asked over here.

Everybody on the team on this side has in the past carried out, led substantial negotiations in the private sector. Like every good negotiating team, one of the things you always do is lay out in advance what you're negotiating goals are. This team accomplished every one of its negotiating goals in the creation of this framework.

If I could address your point for just a second. I think it was, in some respects, the very fact that you would ask the question suggests the problems that the bilateral relationship have faced. Someone in this room wrote a op-ed page piece -- an Outlook page piece for The Post last week in which they talked about a gap of trust. That is what has occurred.

One does not have to have a relationship which is characterized by, from the beginning, a threat of sanction. But that capacity has to be there. What this framework establishes is sector by sector, structural area by structural area, the capacity to establish goals, to establish objective criteria, both quantitative and qualitative and to hold frequent consultations with respect to those. When they are not met, we have access to our national law.

Q On the multinational, what does that mean? Does it mean when the negotiation is concluded in a particular sector, for example, that the U.S. will be negotiating for the rest of the world or --

MR. CUTTER: The question was, what does it mean to be multinational or multilateral. And I'll say one line on it and then Charlene, as the Deputy Ambassador of USTR, ought to make the longer point. We have felt that these negotiations are most appropriately considered from the perspective -- from a multilateral perspective and from a most favored nation perspective. And we have stipulated that everything in these negotiations are to be on an MFN, most favored nation basis, in which the benefits accrue to those who can compete the best.

MS. BARSHEFSKY: There's no question that this arrangement is a bilateral arrangement between the United States and Japan. And in the context of it being a bilateral relationship, the United States has obviously focused on sectors of the Japanese economy in which the United States is highly competitive -- that is, in which the United States is a world leader in every market other than in Japan.

So while we will make the benefits achieved under these agreements, that is the market access benefits achieved, open to the world on an MFN basis. We anticipate, frankly, because of the sectors we've chosen that substantial benefit will accrue to U.S. producers.

Q Do you anticipate that any measurement of progress would be made, not just in terms of whether the United States has achieved market penetration, but whether market penetration has been achieved overall? Is that correct?

MS. BARSHEFSKY: Yes, it is. What the quantitative and qualitative indicators would be in any given agreement is obviously open to negotiation. Some indicators would be appropriate in some kinds of agreements, other kinds of agreements may require other kinds of indicators. But those indicators, as objective indicators, can include not only what would be good for the United States, but what would be apparent for the world as well.

Q Will those objective criteria, by sector --will they be made public when they are set? Will they include numerical targets? And, secondly, on the broader question of significant reduction from the current accounts, how many years do you expect before they get back to one-and-a-half percent --

MS. BARSHEFSKY: Let me take the second part of your question first on targets. This is the second time I've heard the use of the word "targets." We have never, in this negotiation, said or asked for numerical targets. That is to say, for market-sharing arrangements or for a specific resultoriented outcome, what we asked for and what we got in this agreement is a series, a mutually-agreed series to be negotiated of objective criteria, qualitative and quantitative, which would be used to measure progress toward market access.

To the extent progress is made, as based on those indicators, our view is that the agreement is working. And to the extent progress is not made based on those indicators, that suggests either that the agreement was not well negotiated, or perhaps negotiated the wrong issues, or that implementation is lacking. It's in the latter context that we have reserved all rights to use United States trade laws.

Q Will that be made public?

MS. BARSHEFSKY: Our bilateral agreements are public, yes, they're public documents.

Q Can I follow up on that? How will you measure how much progress? Let's say an indicator goes from one to two, or from 10 to 11 -- you say that's not enough progress --

MS. BARSHEFSKY: I think it's impossible to answer that question in the abstract.

Q If you're not going to -- agreement, target for how much progress should be expected -- you're not going to say in the specific agreement, we think that this particular indicator should go to this kind of range?

MS. BARSHEFSKY: Let me say this: I don't want to prejudice what we would or would not attempt to negotiate in any particular agreement for any particular sector. The important point, though, is that we what we are attempting to measure is progress toward a more open market, progress toward increased access for U.S. and foreign goods and services into the Japanese market. That is the goal of this framework, and that goal is quite explicitly stated in the framework, and that is the intent behind the use of objective indicators.

Q question about their surpluses would be down to historical levels -- how many years?

MR. CUTTER: What we've said in the framework is the median term. Our interpretation of that is four to five years, and our interpretation, as Larry said earlier, of what "highly significant reduction" means, is a reduction in the current account surplus below two percent of GNP.

Q Isn't that a set-up to the problems of the past where we wouldn't get agreements with the Japanese in writing, we interpreted them one way, they interpreted it in another way and we just had long years of negotiation --

MR. CUTTER: Let me see if I can tell you again what you have here. On the macroeconomic side, you have the single strongest commitment the Japanese government has ever made to the reduction of its current account surplus. On the microeconomic side, you have a clear and explicit commitment to the use of objective indicators, quantitative and qualitative, as a means of assessing and evaluating progress.

There has never been a framework agreement of any kind that moved that strongly toward being able to gauge the results of a negotiation. So the answer to the question is, what you have is something that goes far, far further toward explicitness and clarity and deadlines and schedules than anything you have ever seen before.

Q What is the U.S. commitment in the numbers?

MR. CUTTER: The U.S. commitment to numbers has been -- it's one of the strongest points in our negotiation, is that President Clinton committed within the first month of his time in office to a $500 billion reduction over four years in our budget deficit.

Q No new commitment?

MR. CUTTER: Wait a minute, though. It's a point that was from time to time made to us in negotiations. It has been that asymmetry or imbalance, which has been argued to be one of the principal problems of the global economy. The President moved to fix it. We have argued that it has been the other major asymmetry in the global economy, which is the Japanese current account surplus, that the Japanese political leaders should now move to fix.

Q Mr. Cutter, back to your reference to the trust gap, a few months ago in their meeting in Vancouver, President Clinton warned President Yeltsin about the complexities and difficulties in negotiating with the Japanese. Why are you so sure that now yes means yes?

MR. CUTTER: My answer is perhaps somewhat longer, but it is the following: that I personally believe -- I've said this a number of times -- that the nature of the way in which we've carried out negotiations for the last 12 years, which is that we whine and they won't move -- (laughter) -- has been one of the more unproductive bilateral relationships or ways of managing one that I can think of. And that what we've done is put in place a framework in which we've defined new rules for a new game and now we're going to proceed to play the game.

I have seen absolutely nothing -- none of us have -- our interlocutors, I guess there term is other side -- were very, very tough negotiators. This was a negotiation that went word by word by word by comma. But I have also seen absolutely nothing to suggest that after the hard negotiation, they don't follow through. And we have gotten, after a negotiation that creates a framework of the kind that we've built now. And we have gotten explicit assurances that this is a framework agreement by the government of Japan, not by a particular government.

Q How do you keep these quantitative goals from becoming targets, the quantitative measurements becoming targets or ceilings, even, for --

MR. CUTTER: We thought long and hard because several of us up here have been, in the past, debaters and we found the managed trade issue to be a fascinating debating ploy that was theological in nature and had absolutely nothing to do with what we're trying to accomplish.

What we've said in the agreement is sets of objective criteria. And our point is that it's inconceivable for anyone to argue that there is very often in a $4.8 trillion economy any one number which indicates a market or a sector. So, we want to use sets. And our view is they probably have to be both quantitative and qualitative. And it is by using a set of them, which we think will more appropriately and accurately reflect the state of play in an economy -- in a part of the economy at any particular time -- that we think that we can avoid the market management or trade management side of this dispute and focus on results in an appropriate way.

Q Obviously, we're not trade experts; I want to make sure I understand this topic -- highly significant. Right now, if I understand, the surplus is $50 billion. If you go -- tell me this is what I want to understand -- in hard figures -- surplus trade deficit. Will you give me some hard figures to explain what you mean by three percent of GDP to two percent because there are lots of different figures out there?

MR. CUTTER: I would like to ask one of the world's leading macro-economists to answer that question if I could.

MR. SUMMERS: We're talking about Japan's global surplus not Japan's bilateral surplus with the United States. That surplus is in the range of $130 billion which is approximately three percent -- a little bit above three percent of Japan's total GNP. We're looking for that surplus to come down in a highly significant way over the next few years. If that happens, we would -- it would fall below two percent of GNP. And we expect that to happen. That would create over a million jobs in the world as a whole and several hundred thousand jobs in the United States as a consequence of Japan's surplus coming down.

Q What does that mean exactly -- globally, so what is the figure for the U.S. down from $50 billion to what?

MR. SUMMERS: When the global surplus comes down, we can't make a concrete -- I can't give you a precise figure. We've rejected the idea of setting, of talking about the issue in terms of Japan's surplus with the U.S., because what matters globally is Japan's competition all over the world, where they compete with us. What we can say is that this will make a very substantial contribution to reducing the U.S. trade deficit or current account deficit by a quite significant fraction of the $50 billion -- of the reduction in Japan's surplus. But I cannot give you a precise number, because we've operated on a global basis.

Q Can I ask about this question of targets, because I think this is perhaps the most -- it gets to the nub of the dispute that's been holding things up all week. The Japanese did not succeed in getting in this agreement a sentence that they wanted, that these numbers would be used as targets or goals or commitments. But on the other hand, I don't -- based on a quick read of this document, I don't see anything that suggests that these numbers would be used as targets or goals or commitments. All that seems to be committed is some sort of review of where things have been in the past. So my question is, aren't you basically condemning yourselves to fighting the same battles in each one of these areas from now until kingdom come?

MR. CUTTER: There is -- as I said, we laid out a set of negotiating goals and got in the area that you're talking about, not just sort of, but precisely -- precisely -- what we told ourselves we wanted to get some months ago. And the answer to your question is that in any all-encompassing framework of this kind there are going to be disputes. You've posed it in a way that compares this against some ideal there where two sovereign nations agree, henceforth and forevermore, for all contingencies in the future and in all sectors of the economy they will agree on rules which will keep relationships amicable and there will be no disputes. There ain't no such world.

What we have done is create a better, tougher, more carefully defined, clearer, with better ground rules, something that I said earlier are new rules for a new game, agreement or framework than anything that has existed before.

Q Mr. Cutter, the Japanese are saying that these specific targets that will be negotiated won't be binding but will be voluntary. Is that the way the U.S. side sees it as well?

MR. CUTTER: The framework agreement says specifically that there will be objective criteria, sets of objective criteria, both quantitative and qualitative, used to assess progress. It is not a contract. Nations don't make contracts of the kind that I just laid out in absolute. There may well be a few disputes from time to time. But as I said it is the clearest, toughest, firmest such agreement that has ever been made.

Q For whatever reason the United States fails to reduce its budget deficit, does that release the Japanese from their commitment to reducing their trade deficit or trade surplus?

MR. CUTTER: Both nations have pledged utmost efforts to accomplish both the macro-economic, i.e., the trade surplus and the current account and the budget deficit goals accomplish both the macroeconomic -- i.e., the trade surplus and the current account and the budget deficit goals. I think the more important question would be if there was a clear case of absence of good faith in such an effort.

Both of us recognize that so long as one puts in place the right policies, that even when one puts in place the right policies, the world can move in ways you didn't expect. So the short answer is, on this one we see this as a clear and reciprocal and balanced relationship and agreement.

MR. GERGEN: The briefers all have commitments. One individual here, Larry Summers, has agreed to stay back. He's going to go on the press plane to Seoul, will be available -- a couple of the rest of us are going to join you on the press plane to Seoul in case you have additional questions.

I might just relate to you for a moment a background on the decision-making here just so you understand it. After we met here last night, there was a gathering with the President up in his suite. It occurred late last night, and this was a gathering that went on until about 2:00 a.m. in the morning, and it was at that gathering where there was a draft of this agreement that the President had a chance to go over with his advisors. All of the people that were here briefing today were in that room, in addition to Secretary Christopher and Mickey Kantor, and there were two or three others of us -- Sandy Berger and Tony Lake and a couple of us from the White House staff who were there.

And I just wanted to report to you that the President posed a couple of questions to the group after he read the draft. He wanted to know things: Is this good for the country, and will it work. And he went around and asked each person in the room what their judgment was and whether they would give him a recommendation about whether this was something that he ought to embrace. And I want to tell you that there was a uniform, universal recommendation to him within the room that this was a good agreement, and it would work, and it was worth doing. And the discussion centered on these questions about why the relationship, the trade relationship has not worked in the past.

There have been repeated trade agreements in the past, and tended to bring down the deficits, to bring down the surplus that exists on this side, and those agreements haven't worked. As a percentage of GDP on the Japanese side, the trade surplus has gone up, not down. From the numbers that existed, these historic numbers have been talked about in the 1970s and the 1980s. And the understanding was that this old approach hasn't worked, and that this agreement was an attempt to put the relationship on a new footing, to take a different approach, one that would be more productive.

The President understood that what this was, was a framework that would lead -- would pave the way to agreements, industry by industry, that would be results-oriented, that within that context, as you went industry by industry, there would be an overall reduction, a highly significant reduction in the Japanese surplus, back to the levels that pertained in the '70s and '80s. And as Larry Summers said, a highly significant reduction was interpreted in the room last night as one that would bring the surplus down as a percentage -- a current account surplus as a percentage of the GDP was interpreted to the President as one that would bring the current account surplus down from some 3.4 percent of GDP, if it were a highly significant reduction, it would come in under two.

The President thought on that basis the resultsoriented nature of the sector-by-sector agreements and the fact that it would bring an overall sharp reduction in Japanese trade surpluses, and the fact that under this agreement, the United States retains the various measures it has employed in the past to bring results, the framework agreement provides that the United States and Japan would try to work this out on these regular meetings, but the United States will retain the right to use 301, it will retain the right to go to multilateral institutions.

And, given those three key points, industry by industry, results-oriented reductions, the overall reduction in the current account surplus and the retention by the United States of those measures for enforcement, the President concluded that this was an agreement that was very much in the interest of the United States and was in the interest of Japan. It was an agreement that would be good for American workers and good for Japanese consumers. It would enlarge world trade, it could lead to more jobs, which is a very important part of his theme here. And so he concluded about 10 minutes to 2:00 a.m. last night that the United States ought to accept this agreement.

There was some minor word changes that needed to be worked out back and forth. He sent word last night through his advisers back to the Japanese. I think that word went back about 2:30 a.m.; there were some further talks during the night and the agreement was finally wrapped up early this morning I think around 8:30 a.m. if I'm not mistaken. And that concluded and we went from here.

So, on that basis, I'm going to leave you. But I wanted to make sure you understood where the President was coming from on this.

Q What you're saying is it's been decided it's in the interest of both countries so why not separate -- why wasn't this 301 separated out from this agreement?

MR. GERGEN: It was understood it was going to be done by these side letters. And those letters will be made public as we said.

Q in side letters?

MR. GERGEN: Yes, I think the exchange of side letters.

Q On this issue of surplus reduction, it's your interpretation that it's below two percent of GDP. Does Japan share that interpretation? If they do, why isn't it in the agreement? And if they don't, doesn't that mean that there's just going to be a big argument in the future about whether they have indeed achieved a highly significant reduction in --

MR. GERGEN: Obviously, there are numbers -- results involved and tangible ways to monitor in the sector by sector. And within that context, the Japanese have committed to these highly significant reductions. And there have been extensive discussions with the Japanese about this, what these highly significant reductions mean.

Q it in the agreement?

MR. GERGEN: Because the parties worked it out. That's what I was trying to explain to you over the last couple of days. That's why it was so complex; that there were a series of -- there's a lot here that's subject to interpretation. That's not the only issue that's subject to interpretation. But there was extensive discussion with the Japanese about what the American perspective was on this and what it all meant.

Now, listen, we promised you that we were going to let you have some time to file. There will be -- as I said --Mr. Summers is going to be available on the press plane on the way to Tokyo so if you have additional questions, we'll have somebody available to you.

Thank you.

END11:22 A.M. (L)