THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING ON JAPANESE TRADE AGREEMENT BY U.S. TRADE REPRESENTATIVE MICKEY KANTOR The Briefing Room
10:36 A.M. EDT
AMBASSADOR KANTOR: Good morning. I'm pleased today to announce the resumption of the framework negotiations between the United States and Japan. President Clinton just spoke with Prime Minister Hata. They began the phone call at 10:20 a.m. Eastern Time, 11:20 p.m. Tokyo time and finished -- it lasted about 14 minutes.
President Clinton congratulated the Prime Minister on the hard and effective work of his negotiators, and also for the personal efforts of the Prime Minister. As you know, when Prime Minister Hata was Prime Minister, he spent numerous hours in the original talks back in February and, of course, was engaged with me in talks in Marrakech; and of course, he had a very important May 9th phone call, which followed Marrakech with the President, which led to Prime Minister Kakazawa's phone call to me on the 13th of May, which, of course, led to this latest round of successful negotiations.
The Prime Minister and the President had a good and thorough conversation about the framework. They both agreed this shows that they can resolve issues and strengthen the relationship between the two countries, and it will boost confidence between the two countries to move in the right direction. Prime Minister Hata said, where there's a will, there is a way. And both agreed that we can move forward now quickly.
Before moving into the details of the agreement reached early this morning about 1:30 a.m., first let me recognize Ambassador Charlene Barshefsky and Deputy Assistant to the President Bo Cutter, who both were more than instrumental, who were deeply involved in every aspect of this negotiation. Both have been since July '93, and this would not have happened as successfully without their working with Mr. Hiyashi, representing the Minister of Foreign Affairs, and I think he deserves the came credit as they do.
I'm also pleased to note that I talked to Foreign Minister Kakazawa this morning. We talked about 8:30 a.m. Washington time, that would be 9:30 p.m. Tokyo time. We spent quite a while on the phone. We're going to try to get together as soon as possible. He indicated that he might be able to meet me in Paris surrounding the OECD meetings which would follow up meetings which would begin immediately today between working groups to re-engage the sectoral talks in the framework in auto and auto parts and insurance and, of course, in government procurement.
The United States also is discussing with Japan extending the framework talks as soon as possible to other areas, such as financial services, glass and intellectual property. This is the ninth agreement between Japan and the United States over the last 16 months. I think it's fair to say that these two countries are moving forward on the economic area as well as in the strategic and political areas as well.
On February 11th, this year, for background purposes, President Clinton and then-Prime Minister Hosokawa agreed that these sectoral agreements could not be reached and it was better to have no agreements than merely cosmetic agreements. I would note at that time the President said we wanted a substantial macroeconomic package from Japan, that we were seeking to substantially increase and access in each sectoral agreement. That we needed objective criteria to measure progress in each sectoral agreement. That we needed qualitative and quantitative criteria. And finally, that we were not seeking to manage trade or to seek numerical targets. Early this morning, we achieved agreements on every one of these points.
On April 15, I met then-Foreign Minister, now Prime Minister Hata in Marrakech, Morocco. I presented Mr. Hata the three points which reflect what I just mentioned above -- macroeconomic issues, the goals of each sector, and, of course, objective criteria -- quantitative and qualitative -- in order to measure progress. The meetings, of course, at Marrakech were very positive. And then I've already spoken of the May 9th call between Mr. Hata and the, Prime Minister Hata and the President, the May 13th call with Foreign Minister Kakazawa, the meetings here in Washington beginning Thursday of last week. And I will also note that I will now talk to Kakazawa five times in the last five days and the Foreign Minister has been deeply, thoroughly, personally and effectively engaged in these discussions.
Let me just mention some of the details of what we agreed to and then I'll be happy to take questions or, of course, my colleagues are also available to take questions as well. First, on macroeconomic issues, Japan reiterated the importance of its framework commitments to actively pursue the medium-term objectives of promoting strong and sustainable domestic demand-led growth and increasing the market access of competitive foreign goods and services intended to achieve over the medium-term a highlysignificant decrease in its current account surplus and to promote a significant increase in global imports of goods and services, including from the United States, and to take measures, including fiscal and monetary measures as necessary to realize these objectives.
Second, agreement was reached on results-oriented goals for priority sector agreements. It is now clear and mutually understood that the purpose of each agreement is to achieve concrete and substantial results in the market, increased access and sales, not merely to change regulations or procedures. And, third, on objective criteria, the two governments reached a basic understanding on how the criteria are to be used. They are for the purpose of evaluating progress toward achieving the results -- goal of each agreement.
We have confirmed we are not seeking numerical targets; the President said it on November 11th. He said in Atlanta on May 3rd -- check that date, I think May 3rd -- he said it to the Prime Minister today on the phone. We have said it continually since July 3rd of 1993 again and again, we're not seeking numerical targets or managed trade.
Rather, as is now agreed, objective criteria will provide the basis for deciding if the agreements succeed or fail to meet their purpose, to achieve concrete results.
Furthermore, we've agreed to apply both qualitative and quantitative, and quantitative criteria to the sectoral agreements. This goes beyond the framework agreement, which calls for qualitative or quantitative, or both. This specific criteria will be need to be worked out by the individual working groups. This is a firm commitment to a results-oriented agreement.
I'd be happy to take your questions.
Q Ambassador Kantor, maybe you could help us out by giving us an example of how you might evaluate whether there is real quantitative and qualitative improvement in the market in something, say, like auto imports and auto part imports.
AMBASSADOR KANTOR: Let me give you one example of a quantitative criteria which -- and then how we'd measure progress. In autos, for instance, the number of Japanese automobile dealers handling cars built in the USA would be a good example -- now, let me be very careful -- none of this is agreed to, this is an example; I have to say this about five times to make sure -- a hypothetical, thank you, it's always nice to be helped up here -- it's a hypothetical example, but, of course, if we, along with all the other criteria -- let me make something very clear here: there will be in each sector any number of qualitative or quantitative criteria. We will look at all of them as a set, or taken together, to determine whether progress is being achieved for the purposes of understanding whether we've achieved success or failure. Not any one criteria will be determinative of success or failure.
Q I'm sorry, so an example is --
AMBASSADOR KANTOR: Well, you would have six or seven. I could stand -- we have four different -- I'm not going to list 28 different --
Q Just give us two.
AMBASSADOR KANTOR: Let me give you two more. Another quantitative criteria -- in insurance, for instance, the prompt, substantial and continuous increase in sales by foreign insurance providers in Japan -- quantitative criteria. A qualitative criteria, just to give you -- so you can look at the difference -- in autos, since we're talking autos -- the degree of cooperation in joint R & D projects and design relationships between U.S. parts suppliers and Japanese car manufacturers in the U.S. and in Japan -- it's important -- and in Japan.
Now, I hope that clarifies the difference in qualitative versus quantitative in the fact we'll look at all of them taken together in any particular sector. But let me make one thing, I guess clear, as has been noted: We have preserved all our trade laws in this discussion. The Japanese have never asked us not to do anything with our trade laws; they are preserved, and of course, we will exercise those laws when necessary.
Q Could you tell us, in laymen's terms, what's the difference between numerical targets and quantitative goals?
AMBASSADOR KANTOR: Numerical targets would set -- managed trade would set a quota, in effect. That's why we say we were never for them. We didn't want -- the semiconductor agreement has always been held out as an example of a numerical target or quota. Where it was agreed that, by the end of 1992, foreign penetration of semiconductors in the Japanese market would reach 20 percent, that is a numerical target or a quota.
That's not what -- we're not doing that in this agreement. What we're doing in this agreement is quite clear. We're saying, how do we measure progress? How do we measure success or failure? How do we make sure this was results-oriented? Because the frustrations in the past have been there was no way to measure the agreements between Japan and the United States. That's what we've achieved. That's all we've ever wanted to achieve, and we've done that through these negotiations.
Let me say, not just because of the fine work of Charlene and Bo, but the good work also on the part of the Japanese negotiators and the leadership of Prime Minister Hata and Foreign Minister Kakazawa -- I can't say enough good things about how they have put this together.
Q Sir, could you say that the best evidence that this is not managed trade that you're seeking is that it is not only American goods that you're seeking to measure?
AMBASSADOR KANTOR: Yes, we're seeking to open markets for all foreign competitive goods. The goal that's been applied now to every sector says, substantial increase, access and sales of foreign competitive goods into the Japanese market.
Q Now, in the fine print of that, that's not going to end up boiling down to just me and American goods, is it? Because of the areas in which you're negotiating?
AMBASSADOR KANTOR: No, it never has. We've negotiated on the basis of foreign competitive goods.
Q Sir, could you outline the major areas of compromise between the two parties, and also why those compromises were reached, or how you got to those compromises?
AMBASSADOR KANTOR: Well, the major areas, I think, for all of our purposes, on the one hand the Japanese government wanted us to make sure that we made it clear that we weren't seeking numerical targets. No matter how many times we set it -- and I can understand, based on the semiconductor agreement, and that was what their concerns were -- that we had to put it down on paper.
Our concerns were, we wanted a results-oriented agreement that made sure we could measure success or failure or the progress of these agreements. Those were the major areas of compromise. And remember, at one point, or the framework agreement, not at one point, says quantitative or qualitative or both. We have now agreed that every sector will have quantitative and qualitative criteria, objective criteria.
Q Why is that important?
AMBASSADOR KANTOR: It's important because we believe all sectors ought to have that because quantitative criteria as well as qualitative give you a firm basis on which to measure progress.
Q When the framework talks first began last year, there was a very specific six-month deadline to reach an agreement on the priorities sector. Is there going to be another six-month deadline or set period of time by which an agreement in these four priority sectors has to be reached?
AMBASSADOR KANTOR: We don't have any deadlines, but it's clear both governments are committed to move as quickly as possible. I think Foreign Minister Kakazawa called to me today indicating he would like to meet in Paris which is, I guess, just two weeks away, barely two weeks away, indicates, number one, real movement; and number two, the working groups begin this afternoon. So I think both governments are committed to move as soon, as quickly as possible.
It would be unfortunate, unnecessary and unreasonable to put any particular date on these agreements. We'll move quickly, though.
Q Mr. Ambassador, you've had any one of a number of agreements before. You've had an agreement before in this area as well. What is it about this that makes you think it's going to be any more successful than any of those that have already failed in the past?
AMBASSADOR KANTOR: Well, number one, let me just say, we have had more agreements with the Japanese in this administration in the past 16 months, than any 16-month period in American history, and they're working well. Apples, rice, copper, chemicals, construction, cellular telephones. Now we've re-engaged the framework talks. We have had -- all these agreements are working well now; we're very satisfied with them.
Open markets create more exports. Let me give you one example, which makes this framework so critical. In the first quarter of this year, exports to Mexico from the United States nearly equal exports to Japan. Now, we all know the differences between those two economies; the Japanese economy is ten times as large as the Mexican economy. The reason is we have now opened our markets with Mexico; we've yet been able to open the markets successfully in Japan. This is what this framework is all about.
Q I understand that it's an important issue, but why is it you think that this agreement is going to be successful, as opposed to a similar one in the past --
AMBASSADOR KANTOR: Two or three reasons. One, the framework is properly laid out to relieve ourselves of the frustrations of trying to determine whether an agreement succeeds of fails, and that's number one.
Number two, the ability of both these countries to come back together in this framework after both agreeing they didn't want a cosmetic agreement on February 11th I think commits both politically as well as substantively to move forward. And, number three, I think both governments recognize, and the Japanese certainly recognize now that opening their market is not only good for foreign competitive products, but is good for their own economy.
Q Can you explain in laymen's terms what you think Japan --
AMBASSADOR KANTOR: Now, Bob, you're not a layman.
Q Yes I am. If you could explain what you think Japan committed itself during these set of talks in the past few days that it hadn't committed itself to either in the original framework talks or during the subsequent --
AMBASSADOR KANTOR: We had believed in the original framework talks. The Japanese had committed themselves to a resultsoriented agreement, not just process. We were disappointed that, on February 11th in those early morning hours we were unable to reach a results-oriented agreement. What we have now is an agreement that is results-oriented, or at least standards which would result in results-oriented agreements, which would then move us forward. That's what's happened here. And it's critical. We have had so many process agreements with Japan in the past. We have almost 37 -- I think it's around 37 agreements with Japan now. Many are not working well because they're merely process-oriented.
Q But just to clarify, you believe that you originally had this sort of agreement --
AMBASSADOR KANTOR: The framework is clear; these were supposed to be results-oriented. All we did is restate the framework and commit Japan to live up to the obligations under the framework. That's what happened in these negotiations.
I don't mean to denigrate what happened -- these two did a wonderful job, but that was tough, getting back to this point, frankly.
Q If you are not satisfied a year or two years from now, have you given away the right to do anything serious by way of retaliation, other than hold a press conference?
AMBASSADOR KANTOR: There are answers to that -- the answer is no, absolutely not, and I'm not that patient.
Q What's left --
AMBASSADOR KANTOR: I'm sorry, I'll come back. I didn't hear the question. I apologize.
Q To what extent is the weakness of the current Japanese government a factor in this outcome?
AMBASSADOR KANTOR: All I can say is, this Japanese government is showing great strength, leadership, purpose and involvement. It has done a very fine job of with these negotiations, so I wouldn't call it weak at all.
Q Mr. Ambassador, how significant a factor should trade be in the President's decision on Most Favored Nation status for China?
AMBASSADOR KANTOR: Trade is a major factor as we engage nations over the next number of years in a post-Cold War world. It's not the only factor. America always acts out of both principle and interest, which sets us apart from most countries in the world. I'm sure the President will take trade into consideration and other factors as well.
Q And what has been your recommendation?
AMBASSADOR KANTOR: I have never, in 17 years of knowing this President, ever told anyone what my recommendations are to him on any subject, including baseball. (Laughter.)
Q The last time you reached an agreement like this with the Foreign Ministry, there was a big fight in a hotel over in Tokyo among all the bureaucrats --
AMBASSADOR KANTOR: As far as we know, that did not happen this time. As far as we know. (Laughter.)
Q But what assurances do you have this time? I mean, you're making an agreement with the Foreign Ministry again, what assurances do you have from the rest of the Japanese bureaucracy?
AMBASSADOR KANTOR: No one can guarantee, no one can guarantee that these agreements are going to work. I can tell you we have momentum and dedication and purpose and involvement at the highest level of the Japanese and U.S. governments. Now, if they don't work, we have preserved all our trade laws.
We're dedicated to opening markets and expanding trade around the world, but especially with Japan one way or the other. We are dedicated to making the framework operate properly. But if it doesn't, of course, we have preserved our trade laws and I think that answers a previous question, as well.
Q Mr. Ambassador, you said you're not a patient man.
AMBASSADOR KANTOR: At least I've never been accused of that.
Q How soon do you want to start seeing results from these agreements?
AMBASSADOR KANTOR: Well, first of all, we have to reach agreements in each of the sectors, as well as see real progress in the macroeconomic area. I'm not going to set any time limits. It's clear we have some things coming up which are going to require us to make some decisions. All of you are quite aware of those. And we'll make those decisions when those time limits occur.
Q What about the impact of the dollar? The impact of the dollar, Mr. Ambassador, what did that have --
AMBASSADOR KANTOR: I never talk about exchange rates. That's beyond my labor grade.
Q Can you talk about GATT funding decisions?
AMBASSADOR KANTOR: I'm sorry?
Q GATT funding decisions?
AMBASSADOR KANTOR: We're working on a bipartisan basis with members from both parties and both sides -- Senate and House -- and we feel fully confident by the middle of June we'll have a decision; and one that is supported by both parties.
Q Mr. Kantor, why aren't -- why shouldn't we look at these -- this agreement as a weakening of the framework? I mean, now you don't have the six-month deadline anymore. It sounds like you have a way -- you said this is to relieve ourselves of the frustration of deciding whether it succeeds or fails. I mean, doesn't this --
AMBASSADOR KANTOR: No, I didn't say that.
Q Okay, but anyway --
AMBASSADOR KANTOR: -- relieve the frustration of other agreements that were process agreements. These are results-oriented agreements which, in fact, have very strong goals and objective criteria -- quantitative and qualitative -- to measure progress. That's why I believe it's much stronger than it was.
Q But without the deadlines, this gives you an openended period.
AMBASSADOR KANTOR: Well, wait a minute. Let me just say that the deadlines were not the important part of the framework agreement to begin with; the so-called deadlines. Those were merely hopes that when the leaders got together, something would be achieved by then. I think there are a number of incentives that the United States has available to it which will spur us all on to making good, solid, achievable agreements, which will open up markets in Japan for foreign competitive products.
Thanks very much, I appreciate it.
END11:00 A.M. EDT