[Congressional Record Volume 144, Number 28 (Monday, March 16, 1998)]
[Senate]
[Pages S1964-S1966]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    RELATIONS WITH JAPAN AND TO HONOR MIKE MANSFIELD'S 95TH BIRTHDAY

  Mr. BAUCUS. Mr. President, in a few days, Washington's cherry trees 
will come into bloom by the Tidal Basin. As you may know, the Empire of 
Japan gave us these trees in the year 1912, as a gesture of thanks for 
President Theodore Roosevelt's role in ending the Russo-Japanese War.
  But with due regard for TR, no one in this century has done more for 
our relations with Japan than Montana's most accomplished and honored 
son: Mike Mansfield.
  Today Mike celebrates his 95th birthday. To honor this occasion, and 
with thanks for all that Mike has taught me and all of us over the 
years, I would like to offer some thoughts on our relationship with 
Japan as we approach the next century.


                    The UNITED STATES-JAPAN ALLIANCE

  In the past fifty years, America and Japan built an enduring 
alliance. It is the work of statesmen like Douglas MacArthur and 
Yoshida Shigeru after the Second World War; Dwight Eisenhower and Kishi 
Nobusuke, who steered the US-Japan Security Treaty through the Senate 
and the Diet in 1960; and Mansfield himself in his years of service as 
Ambassador to Japan.
  It has weathered the Chinese Revolution and the Korean War. Crises in 
the Taiwan Strait. Vietnam and forty years of Cold War confrontation. 
Through it all, this alliance has helped prevent another broad Asian 
war. That in turn has helped all the nations of the Pacific--from the 
lonely islands in sight of the Antarctic coast across the equator to 
the snows of Manchuria--to grow, live peacefully with one another, and 
give their people better lives. And as we look to the new century, we 
must recognize that preserving and strengthening this alliance is our 
single most important foreign policy task in Asia.


                        THE CONVENTIONAL WISDOM

  We must begin by understanding, to use Mansfield's famous phrase, 
that our relationship with Japan remains ``the most important bilateral 
relationship in the world, bar none.''
  To many Americans today--and perhaps many Japanese--that may seem 
less than obvious. Many of us look at Japan as powerful but helpless 
and fading; much like the ``things that have lost their power'' Sei 
Shonagon describes in the ``Makura no Soshi'':

       A large boat high and dry in a creek at ebb-tide; a large 
     tree blown down in a gale, lying on its side with its roots 
     in the air; the retreating figure of a sumo wrestler who has 
     been defeated in a match.

  The perception is easy to understand. At home, since 1991 Japan's 
economy has grown by an average of just 1% a year. Japan's political 
system has responded only with a series of minor spending and 
regulatory shifts, punctuated by a massive error in nearly doubling the 
consumption tax on a nation that already consumes far too little.
  The Nikkei Index is down 60% from its peak and shows no signs of 
recovery.
  Japan's banks are adrift in a sea of bad debts, claimed by the 
Finance Ministry to be 79 trillion yen and by others three times that 
much. It has taken eight years to revise banking regulations in the 
``Big Bang,'' and serious action on failed banks is still entirely 
absent.
  Abroad, Japan's Asian neighbors are enduring their worst crisis since 
the Vietnam War. Japan's government has responded with a--
praiseworthy--willingness to contribute to the IMF's rescue packages 
for these countries. But its trade surplus with Thailand and Korea; its 
refusal to open its markets to imports; and its failure to improve its 
growth and consumption rates; helped create the crisis last year and 
now threaten to prolong it.


                               THE TRUTH

  But as serious as this may be, we must not inflate it into something 
even worse. And some of us do just that. A Wall Street Journal column a 
couple months back--headlined ``Japan's Model Has Failed''--is a 
typical piece of conventional wisdom. Typical and forgivable, but dead 
wrong.
  As Maeda Katsunosuke, Vice Chairman of Keidanren, says: ``Japan is 
not experiencing an `economic crisis,' but a `financial crisis.' ''
  I would add to that a crisis of governance, which I will discuss 
later. But otherwise Japan is strong and healthy.
  This year, Japan's manufacturing industries will produce as much as 
ours, in a country with half our population. Japan's great companies--
Sony, Toyota, Mitsubishi, NEC--are as dynamic and competitive as ever. 
Japan builds nearly half the ships in the world. It doubles our annual 
production of machine tools. Filed more patents here in America than 
ever before. And, in an economy three fifths our size, will invest as 
much money as we do in state-of-the-art research and development.
  Japan's social indicators are even better. Its citizens have the 
world's longest average lifespan. Its unemployment rate is the lowest 
in the developed world. Its crime rate is trivial--so low that two 
violent incidents in Tokyo high schools this year appeared to Japan as 
a national epidemic. Its students rate at the top of international 
science and math surveys. And, not least, Japan's poor live much better 
lives than America's.
  So to say that Japan's economy--much less its ``model''--has 
``failed'' is to say something foolish. Japan's problems are serious. 
But they are soluble. And there is no reason to conclude that in the 
first decades of the next century, we and Japan will be less than the 
world's two leading economies; its technological leaders; and, at least 
in potential, its strongest military powers.
  And thus, as the 21st century opens, our relationship with Japan will 
remain the most important in the world. Nothing will do more to keep 
the peace in Asia; to build prosperity in every Pacific nation; and to 
make the world a better, cleaner, healthier place--than preserving our 
alliance.


                             SHARED VALUES

  How do we do it? We need five things. And the first and most 
important of them is summed up in a comment Mansfield made to the 
Japan-America Society a few years ago:

       Remember that we are two of the world's greatest 
     democracies, and that we share basic values--respect for 
     political and economic freedom and a common desire for peace.

  Some alliances are marriages of convenience against common threat, in 
which the partners have irreconcilable differences they can put aside 
but not solve. The classic case is our alliance with the Soviet Union 
in the Second World War. It did not survive the war; nor, probably, did 
its authors on either side intend that it should.
  But alliances based on common values, with proper care, can outlive 
the threats they were created to address. And our alliance with Japan 
is one of those.
  Our people share a reverence for democracy. We share the freedoms to 
travel and to speak our minds. And we share something that may appear 
superficial, but really is profound: an appreciation for one another's 
way of life.
  You can see that on a walk down any big Tokyo street, as you pass the 
Body Shop, Condomania, McDonald's, Wendy's, and dozens of other 
commonplaces of modern life. And you can see it here in America with 
karaoke bars, teenagers wearing tamagotchi, sushi bars, Banana 
Yoshimoto in bookstores and the Teenage Mutant Ninja Turtles on 
Saturday morning TV.
  These things may sound trivial--fads and consumerism at worst, a 
taste for one another's popular culture at best. But they are 
important. They show that ordinary people in both countries--salarymen, 
high school kids, soccer moms--understand that what is important in 
life is not national crusades, military glory and foreign wars, but the 
good life and the quest for peace.


                        SHARED VIEW OF SECURITY

  That is a solid foundation for the second thing we need: a united 
policy to

[[Page S1965]]

keep the peace in a world perhaps less dangerous, but more complex, 
than the world of the Cold War.
  In the coming years, China will choose between the highly responsible 
and important role it has taken up in the Korean question and in the 
Asian financial crisis; and the belligerent approach it adopted in the 
Taiwan Strait crisis just two years ago.
  We will see historic events across the Tsushima Strait, as North 
Korea's totalitarian system crumbles and the Korean nation moves 
towards unity.
  Russia, already reviving economically, will regain its status as a 
great Pacific power.
  And the financial crisis in Indonesia, whose waters carry most of 
Japan's energy supply and 40% of all the world's shipping may create an 
entirely new set of questions.
  We cannot predict the future in any of these areas. But we can be 
certain of two things. We can address them more safely and peacefully 
if our own military is strong and our policy does not go out of its way 
to pick fights. And it will be close to impossible for these processes 
to lead to a major war as long as we remain allied with Japan--Asia's 
most advanced economy and, potentially, its strongest military power. 
Or, to use Mike Mansfield's words:

       Remember that we are allies, and that our security and 
     foreign policy cooperation is essential for the peace and 
     prosperity that the Pacific region enjoys today.

  The new Defense Guidelines we signed last year; our cooperation on 
Iraq; and our joint work for Japan's permanent seat on the UN Security 
Council show me that we are listening to that advice.


                             COMMON AGENDA

  Third, the next century will present us with a new set of issues, 
arising from the extraordinary growth of industry, science, trade and 
migration. And as the world's two leading technological powers, we and 
Japan have special responsibilities to address them.
  Mass trade and migration have enriched the world and made ordinary 
people freer than ever before. They also allow new diseases to spread 
faster than ever; put great strains on food safety; and eased life for 
international criminals.
  The industrial expansion of Latin America, Southeast Asia and India 
has reduced poverty and allowed ordinary people to live longer lives. 
It has also reduced fishing stocks, sped global warming and accelerated 
the decline of the world's forests and wildlife. Crises like the fires 
in Borneo, or slowly developing problems like the accumulation of toxic 
materials in fish, can affect dozens of countries or even the whole 
world.
  These things will challenge the wisdom and capacity of us all; but 
early signs are good.
  Through the ``Common Agenda,'' launched in 1993, American and 
Japanese doctors have eradicated poliomyelitis in the Western Pacific. 
We hope to wipe it out worldwide by the year 2000. Our environmental 
experts are developing ways to preserve coral reefs, a biodiversity 
resource the naturalist E.O. Wilson calls ``the marine equivalent of 
the rainforest.'' Still others are creating new technologies to monitor 
the health of oceans and the pace of climate change; predict 
earthquakes and floods more efficiently, and slow the spread of AIDS in 
Cambodia and Vietnam.


                       THE ECONOMIC RELATIONSHIP

  Fourth, we need a strong, fair and reciprocal relationship in 
economics and trade. And the structural imbalance of today's trade with 
Japan is, I believe, the greatest threat to our alliance.
  Our trade with Japan is vast. In goods and services together, it 
likely topped $250 billion last year. To put this in context, our $14 
billion worth of travel services exports to Japan was greater than the 
total of all our exports--cars, wheat, computers, insurance, 
everything--to China.
  And most of this relationship is good for both of us. Japan is a 
crucial market for Montana's cattlemen and lumber mills. Japanese 
companies, like Advanced Silicon Materials with its plant in Butte, 
invest and create jobs here in America.
  But depending on currency values, we run a structural deficit of $30 
to $70 billion. And the reason is not, I believe, macroeconomic factors 
like budget surpluses, deficits, growth rates or savings. It is that 
Japan's market was rigged against imports in the 1950s and 1960s, and 
has not fundamentally changed since.
  As farsighted as our policymakers were in other areas, they did not 
respond as Japan's ministries shut down American auto factories, closed 
out our textile markets and blocked our agricultural exports. And as 
the kendo master Miyamoto Musashi wrote in the ``Book of Five Rings,'' 
the results were inevitable: ``If you diverge only a little from the 
correct Way, you will later find this a large divergence.''
  So these methods spread throughout Japan's economy. To the great cost 
of American producers and Japanese consumers, they remain in force 
today.
  The Health Ministry uses long reviews and irrelevant tests to block 
foreign pharmaceuticals. It takes an average of forty months, or three 
times as long as our FDA, to approve any foreign medicine; and it has 
taken thirty-eight years and counting in the extreme case of oral 
contraceptives. So Merck and Pfizer sell less than they should; and 
Japan's elderly are denied the most effective new medicines, like Eisei 
for Alzheimer's patients and Fosomax for osteoporosis--ironically, a 
drug developed by a Japanese pharmaceutical company and sold by an 
American firm, just as VCRs were invented in America and are sold by 
NEC and Sony.
  Japanese citizens sign 99-year mortgages on houses because foreign 
construction firms remain locked out of the market. American auto 
companies can't find dealerships, whether steering wheels are on the 
right, the left, or the roof. And Japanese families pay $20 for a 
melon, $5 for an apple, and outrageous sums for a bag of rice.
  Americans get angry about this. Rightly so. And the consequences can 
go beyond trade. While times are good in America, most people will live 
with the imbalance. But when our economy turns down, it will be right 
back above the fold in the daily paper. And we could return to the era 
of scare headlines about Japanese buying the Lincoln Center; movie 
theaters running films like ``Rising Sun''; Members of Congress holding 
Toshiba-smashing parties on the Capitol steps; and Americans beginning 
to see Japan as less a partner than a rival or even a threat.


                              TRADE POLICY

  I do not want to see that happen. The time to prevent it is now, and 
I do not think our policy is up to the job.
  Today we are focused almost totally on macroeconomics: tax policy, 
fiscal stimulus and Japan's growth rate. That is not wrong in itself. 
Japan should be fixated less on its deficit, and more on its 
responsibility to grow faster and import more from its neighbors. In 
fact, faster growth will also help Japan with its budget deficits, as 
has happened here in America. So the Treasury is right to call for tax 
cuts and real stimulus.
  But it is not enough. When we succeed in trade with Japan, it is 
through specific sectoral talks, using retaliation if necessary, to 
address the administrative guidance, informal cartels and 
discriminatory regulations found almost everywhere in Japan's economy. 
That is why the beef agreement Ambassador Mansfield and I pushed for 
nine years ago has made Japan our largest foreign beef market by far--
regardless of what my old friend Hata Tsutomu thought about Japanese 
intestines. It is why the medical equipment agreement and the 
Semiconductor Agreements work. And it is why, let us hope, our recent 
agreements on air passenger service and port procedures will succeed.
  True, this method is uncomfortable. It leads to disputes and 
``friction.'' But when we drift away from it, our exports stagnate and 
our public is rightly frustrated. We need to return to it; and the only 
alternative to that is a sweeping reform in Japan.


                          CRISIS OF GOVERNANCE

  And that leads me to my earlier comment about a ``crisis of 
governance,'' and along with it, the fifth and final part of a strong 
relationship with Japan in the next century.
  A few years ago, a member of the Japanese Diet touched on this in a 
mostly wrong-headed book called ``The Japan That Can Say No.'' He 
meant, of course, ``no'' to the United States in trade negotiations, 
feeling that in order to reform, Japan had to stop what he viewed as 
constant grovelling to the demands of the United States.

[[Page S1966]]

  In the US, around the same time, I was the Trade Subcommittee 
Chairman. So I was making a lot of the demands. And I had the opposite 
complaint--I felt Japan only said ``no.''
  But I have come to believe neither of us was quite right. Like the 
blind sages in the Japanese folk tale, we were trying to describe an 
elephant by examining bits of it. And the past ten years of Japanese 
history have revealed to us, if not the whole beast, then at least a 
more complete animal.
  If we look at Japan's response to its bank failures; reform of the 
Finance Ministry; or the Asian financial crisis, we see a Japan that, 
to exaggerate only a little, cannot say ``yes,'' cannot say ``no,'' and 
simply waits for problems to go away. And the reason is obviously not 
that Japanese cannot understand issues or make decisions. It is the 
nature of governance in Japan.
  Bureaucrats have too much power and too little accountability to 
politicians or courts. Ministers appoint virtually no senior ministry 
officials and have little power over their subordinates. Thus Prime 
Ministers have few means to make ministries work together. Governments 
have too little power to set policy. And citizens have too little 
control over the whole system.
  As a result, regulatory, trade and financial policies set decades 
ago, for a nation recovering from war and only beginning to develop 
civilian industry, continue to guide Japan today. They no longer work 
and they will not work. And this is the root of all the problems I 
cited earlier, from failure to stimulate the economy, to the slow pace 
of banking reform and the lackluster response to the Asian financial 
crisis.


                            POLITICAL REFORM

  And thus, Japan must go beyond deregulation and fiscal policy. It 
needs thorough political reform. A system that can make a decision and 
make it stick.
  It must give more power to ministers at the expense of their 
bureaucrats; elected politicians at the expense of ministries; towns 
and prefectures at the expense of Tokyo; citizens at the expense of the 
state.
  That will take enormous willpower and vision. But I am totally 
convinced that Japan can do it. Recall the explosive reforms and 
industrial growth of the Meiji era, and the rebuilding after World War 
II. Remember that in the right circumstances, Japan's people are among 
the most creative, energetic and hard-working in the world. And look 
ahead to a brilliant future.
  If Japan can make this leap, our relationship will reach its full 
potential--as a creator of wealth for our countries and our neighbors, 
a source of ideas, invention and science that will astonish the world, 
and the world's strongest guarantee of peace.
  And if that sounds like a daydream, remember how far we have come, 
from the end of the Second World War to this era of peace in the 
Pacific. Set aside Health Ministry regulations, fiscal policy, Defense 
Guidelines and every thing else, and reflect on the amazing fact that 
today, more than at any time in human history, ordinary people can live 
a decent, safe, secure life.
  Our alliance for Japan helped make it happen. And Mike Mansfield, on 
his 95th birthday, deserves as much credit for this as anyone alive.
  It is quite a legacy. The best possible tribute to it would be that, 
in the next century, we complete the work he has begun so well.

                          ____________________