1994-05-24 Trade Rep Kantor Briefing on Japanese Trade Agreement

[David Farber <farber () central cis upenn edu>]

Normally I dont send these out but this one may interest enough IPers to be
worth the exception


Dave




                           THE WHITE HOUSE


                    Office of the Press Secretary


______________________________________________________________
For Immediate Release                               May 24, 1994




              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 highly-
significant 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 results-
oriented 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 open-
ended 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