    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [July 2, 1993]
    [Pages 976-983]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Interview With Foreign Journalists
    July 2, 1993

    Economic Summit

        Q. What do you expect to be accomplished out of Tokyo summit? And
    what special roles do you see Japan can play in areas beyond economic
    constitution in--[inaudible]--of global partners with the United States?
        The President. First, let me say I think the G-7 meeting will be a
    very important opportunity for the leaders of the major industrialized
    countries of the world to reaffirm their commitment to global growth, to
    democracy, and to security concerns. I believe there will be serious
    discussions about three issues on the economic front, one really perhaps
    for the first time.
        The first is that I think there will be a real discussion about how
    we can coordinate our economic policies in ways that will produce
    growth. From the first week I was in office, we have spent a lot of time
    working through

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    the finance ministers, the foreign ministers, and others to talk about
    how we can coordinate our strategies. For many years, other nations have
    asked the United States, for example, to lower the budget deficit. And
    we're working very hard on that, first through this $500 billion deficit
    reduction program that has now been passed by both Houses of our
    Congress, then through taking on a health care problem which is the
    biggest source of our growing deficit. And we need to make sure we are
    coordinating those policies with things which will produce an overall
    higher level of growth than we now have. It's a big problem for the
    United States, because two-thirds of the new jobs we've created here in
    the last 5 years have come from increased trade with other nations. So
    if Europe is down economically, if Japan is down economically, it's hard
    for us to do well here. So I think there will be that.
        The second issue I think that we will discuss and, I hope, make some
    genuine progress on, creating a more open trading system and increasing
    the chances that we can successfully conclude GATT by the end of the
    year.
        The third thing that I hope to see a very serious discussion on is
    the microeconomic policies of each of our nations and how we can all do
    a better job of creating jobs within our economy. Even Japan, with its
    very low unemployment rate by western standards, is having some trouble
    now creating new jobs. But it's a very big problem for the United States
    and for every other country represented around this room today.
        And I think that increasingly in a global economy, national policy
    will have to focus on what the economists call microeconomic policies:
    What kind of labor support systems do you have; what kind of education
    and training systems do you have; how do you target investment to create
    jobs? The west, and increasingly Japan, are having difficulty creating
    new jobs, even in times of economic growth.
        It's quite interesting. If you trace the last 6 or 7 years you can
    see that in all the western nations, even when there is growth, there is
    some trouble creating new jobs. So I think that this will all be--we'll
    deal with this, and I hope in a very informal and forthright atmosphere.
        It will be an interesting summit, because there will be several of
    the people there attending their very first one, first G-7, all at the
    same time.
        The second point you made about Japan's role in the world, I'm going
    to do what I can while in Japan to strengthen the bilateral relationship
    between the United States and Japan. In many, many ways it is our most
    significant bilateral relationship and the key to what happens between
    the United States and Asia. It's interesting, even though we have
    incredibly important ties to Europe, economic ties, we have a huge--40
    percent of our trade is now with the Pacific. It accounts for almost
    2\1/2\ million jobs in America, trade with the Pacific. So it's a big
    issue. And we have major security concerns, as you know, with regard to
    Japan and with Korea.
        So I'm very hopeful that even though Japan is going through a period
    of political transition, which I hope the Japanese people will view with
    excitement and interest, not with too much concern, this is a normal
    thing for a democracy. And periodically you go through these periods of
    significant change, and I view it as a positive thing for a great
    country. I think it will leave you stronger and in a better position in
    the world. So I hope we will discuss a lot of our bilateral economic as
    well as strategic concerns there. And I hope that when I leave Japan,
    our relationship will be even stronger than it is when I enter.

    NAFTA

        Q. Mr. President, there was a court decision this week that's a
    roadblock to ratification of the NAFTA agreement. Your administration
    has said that you will go ahead, but you don't appear to have a lot of
    wiggle room in Congress on some of your other economic initiatives. And
    I'm wondering, first of all, how you're going to ensure the passage of
    NAFTA. And secondly, on the eve of the summit, this raises the whole
    issue of the conflict between environmental concerns and economic
    growth, and whether it's drift nets in the Pacific or toxic waste in
    Mexico or the whole problem of aid to the former Soviet Union, that
    conflict between the environment and economic growth underlies a lot of
    these issues. And I'm wondering how you see reconciling those issues at
    the G-7.
        The President. Let me mention the NAFTA first and then I'll answer
    the larger question.
        First, on the narrow issue of the lawsuit, we announced within an
    hour after the court's decision that we would appeal. And we believe we
    can win an appeal, and we can win it within the appropriate time. There
    may also be some

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    other avenues which will permit us to do some kind of environmental
    impact statement and still meet the time limit.
        There is a strong opposition to the agreement in some quarters in
    the United States, and the relative economic problems that we all face
    now make that more difficult. That is, when unemployment is up and
    growth is down, people are more insecure. It makes some in Europe less
    enthusiastic about the GATT now. It's the same reason--it's just--a part
    of it is almost endemic to the human condition.
        I do think we have the votes to pass NAFTA in the United States
    Senate. And I think that--and we do not have today the votes to pass it
    in the United States House. But I think we can get the votes to pass it
    essentially by doing three things:
        First of all, by successfully concluding the agreements now subject
    to negotiation between Canada and Mexico and the United States to
    strengthen our common efforts at lifting labor standards and
    environmental quality, particularly along the Rio Grande River, which
    has been a huge problem.
        And I should say by way of background for the rest of you, the
    reason the labor standards issue is so big is that there was a report
    issued in this country last year that indicated that the Caribbean Basin
    Initiative of the United States, where we tried to get investment in
    Caribbean countries and put plants down there, had not led to increasing
    the per capita incomes of the people working in those businesses; that
    because the people were so poor, that a lot of the people who had taken
    the money that the United States Government had put out had still
    depressed their wages and increased their profits. So we've given some
    thought to this labor standards issue here and the environmental issue.
    So I think if we get those agreements that will help.
        The second thing that will help is if--we have to just make the
    case, you know. Now when we have an agreement, it's a lot easier to
    defend the jobs argument. Right now there's a simple argument against
    NAFTA being waged by, articulated by Mr. Perot in this country and
    others, that you can't make a trade agreement that takes down all the
    barriers with a country on your border with a per capita income that's
    only one-eighth as much as yours is. Everybody will take their money and
    invest in the other country. Well, it has great superficial appeal, but
    the truth is that anybody who wants to go to Mexico and invest their
    money for low wages can do so today. But the market opening measures
    that have been taken by President Salinas in the last few years have led
    the United States from a $5 billion trade deficit to a $6 billion trade
    surplus with Mexico. Mexico is now our second biggest purchaser--
    manufacturer. And we are in effect--because Canada, as you know, is our
    biggest trade partner--we are now building this hemispheric economic
    bloc that we want. And so I think we can refute it on the merits.
        The third thing we have to do is ask the economists to consider what
    will happen if we do not pass the trade agreement. Our relationships
    with Canada are secure, and we have a bilateral agreement, and that's
    fine. But we could go back in our relationships with Mexico, which would
    mean economic problems for Mexico, more trade barriers, fewer jobs in
    America, more illegal immigration. A lot of problems could develop for
    the United States if we do not do the NAFTA.
        I think when those three things become crystal clear, we will
    prevail there.
        Now on the larger issue, there is no easy or simple answer to the
    conflict between the environment and the economy in any of our countries
    individually or in the globe as a whole. However, I believe that our
    goal ought to be to find ways to make preserving the environment good
    economics.
        At the Rio conference last year, Japan, Germany, and many other
    European countries were proving that you could do that because they were
    down there promoting environmental technology while the United States
    was trying to stop the environmental agreements. I think that our
    country was not as wise as many of the nations here represented in the
    way they approached the Rio conference. We have now signed on, the
    United States has, to the Biodiversity Treaty. And we have basically
    adopted a policy of long-term environmental preservation with an
    aggressive effort to figure out how to make jobs and incomes and
    prosperity flow out of that. And I believe that there are lots of
    opportunities to do that.
        If I might just mention one, our bilateral aid package to Russia
    that is now making its way to the Congress focuses heavily on what we
    can do with our technology to help them to reduce the problems that
    their nuclear industry--and not simply their bombs but their nuclear
    power

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    plants, for example--present to them, and what else we can do in the
    area of energy and the environment to help to clean up their environment
    in ways that are good for their economy and good for ours. So I think
    there's a lot of opportunity there.

    GATT and the G-7

        Q. You just said in the beginning, Mr. President, that you hoped
    that Tokyo would, and I quote you, increase the chances of successfully
    concluding a Uruguay round by the end of the year. Can I turn that
    around and say do you think that a failure to do that would seriously
    jeopardize the whole G-7 process as it currently exists?
        The President. Well, there are lots of other nations involved in the
    Uruguay round apart from the G-7. That was one point that Prime Minister
    Balladur made to me in our meeting here.
        But I think that our job is to lead. And I know it is difficult to
    lead when you have troubles yourself. All of us have economic troubles.
    All of us, to a greater or lesser extent, have some political conflict
    within our countries. But I think that it is very important--and almost
    to change the atmosphere and the attitudes of the peoples of the G-7.
    Yes, we're having economic trouble. And the fact that we're all having
    it should be some indication that there is some sort of historic change
    going on here and not that there's some character flaw in our people or
    some great mental breakdown in our countries or something else. This is
    a tidal wave of global change going on here. But look at the resources
    we have: We have innovative work forces; we have great bases of
    technology; we have an understanding of how the world works
    economically. And I think we have within our power the means to move
    forward and break out of this problem we're in but only if we have the
    courage to keep changing.
        And so I would say, to try to answer your question directly, there
    have been debates for years about whether the G-7 process accomplishes
    anything. But if nothing else, if we can agree among ourselves to take
    an expansive view of the future and to talk about the strengths of our
    nations and to recognize that there are only three ways to grow our
    economies. One is through the changes we make internally, the
    microeconomic changes; the other is through coordinating our larger
    macroeconomic policies; and the last is through creating a more open
    system of trade so that there is global growth. It's hard for the
    wealthy countries to grow wealthier unless the people below us are
    getting wealthier and can buy more of our products. It's not a zero-sum
    game. And so I feel very strongly that we ought to come out of the G-7
    with a more vigorous commitment to get the Uruguay round done.
        Now let me just say what I have done in that regard. I have
    repeatedly said that the United States would bend over backwards to get
    that done this year, that there are changes that we would like to make.
    When the G-7 finance ministers and central bank heads were here not very
    long ago at Blair House across the street, I went over and personally
    met with all of them and reaffirmed my commitment to this. So I don't
    know what else I can do, except that I think a lot of this is a matter
    of attitude. We have to try to lift our own visions and lift the spirits
    of our people and realize that when you're in difficulty, the worst
    thing you can do is to hunker down, to withdraw.
        When you have difficulties like this with a fundamentally sound
    system, the time is to change, to be innovative, to be creative, and to
    reach out. And I think that's what we've got to begin to do at the G-7.
    The tone, the atmosphere, the ideas that are discussed in that sense may
    be far more important than anything specific that comes out of the
    communique. What direction are we going to take the world in?

    Global Economy

        Q. Mr. President, nobody seems to be happy with the G-7 process, not
    to mention the results. I wonder if you could define for us--elaborate
    on what you just said--that the purpose of the G-7 in today's world and
    tell us what you would like to change.
        The President. Well, I don't want to be too presumptuous, since I've
    never attended one before. I've only read about them before. You know, I
    always followed them very closely. But what we are striving for--I think
    the other leaders agree with me, including those like Chancellor Kohl,
    who's been to many of these. My own view is there ought to be enough
    time at these G-7 meetings for a serious discussion among the leaders
    without a lot of bureaucratic procedures and rules and regulations about
    these big issues. What about the crisis in the

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    wealthy countries creating jobs? What can we do to create more jobs? How
    do you explain the fact that France, for example--let's take France.
    France had a productivity growth rate that was the highest in Europe in
    some of the years of the late eighties and still had relatively high
    unemployment. The United States, which has far fewer labor supports than
    most of the European countries do, still has difficulty getting its
    unemployment rate below 7 percent. We're well into 2 years after the
    worst of our recession, and yet we are 3 million jobs behind where we
    would ordinarily be at this point after a recession.
        We should discuss these things, and we should think about whether we
    can learn things from one another about how to create jobs in the west.
    We should be able to really talk through very frankly what the political
    and other economic barriers are to getting the GATT done and really
    think about it and talk about it. It's far more important than what's in
    the specific words of the communique, whether we come out of there with
    some sort of commitment to do something, to take action, and to move.
        And finally, I think we ought to really focus on how our individual
    economic strategies may not work as well unless we are coordinated. Let
    me just give you one example. I'm trying to do something that our
    country has not done before. We are trying to dramatically cut our
    Government deficit at a time when our economic growth is slow.
    Traditional economic theory would say if you have a sluggish economy,
    you don't cut spending and raise taxes; you might do the reverse, right?
    Why am I trying to do that? Because we're in a global economy, and the
    United States deficit caused an imbalance in the global economy, okay?
    But now, this can work for us for a while just on our own, because we
    had so much debt in the 1980's accumulated at high interest rates, by
    bringing down the deficit, interest rates in America have dropped very
    low. So businesses and homeowners are going out now and refinancing
    their debt, and that puts a lot of new money into our economy. So I can
    get a little bit of growth just on what we do here. But in the end, this
    will only work if there is an expansionary policy in Japan, if Europe is
    able to resume a higher level of growth so that the system is brought
    into balance, because what we do has a complementary action in the rest
    of the G-7.
        So these are the things, it seems to me, that really matter. And
    that's why I think these G-7 meetings can really make a difference. But
    I think that if we get all hung up on--you know, we all have to have
    these prepared statements, and we're afraid we're going to say one word
    out of the way or make one little mistake which makes a huge headline in
    some country. And then we've got to have every little word right in
    these communiques. I think that's just--that takes a lot of time and
    energy away from what we should be doing, which is focusing on how we
    can make the lives of our people better and fulfill our responsibilities
    as leaders of the world.

    U.S. Leadership

        Q. Mr. President, you said earlier, speaking of G-7 leaders, that
    their job is to lead. Yet there's a broad perception that there is real
    friction and misunderstanding and doubts about U.S. willingness to lead,
    not only in the Japan-U.S. relationship, but in the U.S.-European
    relationship. Why has this happened and what can you do at the summit to
    clarify U.S. goals and reassure U.S. allies?
        The President. Well, let me first of all take issue with you--I
    mean, not the perception.
        The other nations of the world have asked the United States for
    years and years and years internally to do one thing. The only thing
    they ever asked of us internally was to do something about our budget
    deficit, which caused a significant imbalance in the global economic
    relations. I read about it for years before I became President. And
    we're doing that, and it is very tough to do in tough economic times.
    And we're going to wind up with a very tough deficit reduction plan that
    we believe is good for our economy over the long run. And it's not been
    easy to do, but we are doing that.
        Secondly, the major crisis this world has faced since I've been
    President, I think, was what would happen to democracy in Russia. And
    when it became apparent that democracy was in trouble in Russia because
    of what was happening with President Yeltsin, I immediately publicly
    supported him. I called every other leader in the G-7 and many others
    around the world and asked for people to support him. We all did. And I
    think that we had something to do with the outcome of events there.
        I announced a $1.6 billion aid package to Russia, and we have now,
    by the way, obligated

    [[Page 981]]

    well over half of that money. And then I announced another $1.8 billion
    bilateral aid package to Russia which passed the House of
    Representatives with 75 percent of the vote almost last week, bipartisan
    support. It's going to fly through the Senate. The IMF gave their first
    installment, $1.5 billion, to Russia the day before yesterday, and we're
    going to discuss that at the G-7 summit. I think--and that's a huge
    potential market for all of us and a major political issue. And I think
    that is the big issue we have faced, and I think we've done it very,
    very well.
        Now, the only point of contention between us that I can see--we'll
    come back to the Japanese issue; you asked that and I haven't
    forgotten--but the only--in Europe is that we have not agreed entirely
    on how to handle Bosnia, although we've done a lot of work together. The
    United States has spent almost $300 million in humanitarian assistance.
    We have strongly enforced and pushed for tougher sanctions and embargoes
    on Serbia. We believe and the Germans believe the arms embargo ought to
    be lifted on Bosnia. France and Britain and Russia disagree. I
    understand that. But that doesn't mean we can't do anything together. We
    are trying to work together. And this, I think everyone would admit, is
    the most difficult international problem that we face. I'm still hopeful
    that something humane, decent, and politically reasonable will emerge
    from this process before it's too late. But we all have a disagreement
    on that, and I'm sorry we do. But we can't agree on everything. And this
    is a very difficult problem. I still think I was right about what was
    the best course. I think events subsequent to the Athens meeting prove
    that beyond question. But nonetheless, I don't think that's a reason for
    us to give up on the European alliance, give up on NATO, give up on the
    G-7. This is a tough problem.
        With regard to Japan, I think everyone who has looked at the problem
    seriously thought there would have to be some realignment in our trade
    relations. And I think we're going to work that out. But there are lots
    of other things we have in common. Japan has supported the United
    States, and the United States has supported Japan in the things we've
    done to support democracy all over the world. Our security relationship
    is very strong. I intend to reaffirm my commitment to that when I'm in
    Japan, and my commitment to Korea and to Asia generally when I'm in
    Korea.
        So I think a lot of this--let me--if I might, a lot of this
    uncertainty in Europe, particularly, is a function of two things. One is
    the economic problems that we all have which make people always just
    more insecure. And two is, I've only been President 5 months. And we
    have a new Government in France. We have a new Government in Italy. We
    have a new Government in Canada. And so a lot of these folks, we don't
    all know each other. And I think when people don't know each other,
    there is always a--but you're trying to get to know one another--there
    is the temptation to take whatever incident is in the moment and reach
    some huge encyclopedia of meaning in it, which may or may not be
    accurate.
        So I think a lot of these things that you're talking about will be
    taken care of by meetings like this, by trips like this, and by constant
    working together. I will say--but every opportunity I've had to work
    with the other European leaders has been satisfactory. I had good
    cooperation between the United States and Italy, for example, when we
    were trying to reinforce the security of the U.N. forces within Bosnia,
    because the U.S. is committed to defend them if they're attacked, and
    everybody knows that. So I'm just a lot more hopeful about this than I
    think some are. I think a lot of this is just a function of economic
    difficulties and new players who don't really know each other thoroughly
    yet.

    GATT and Resolution of Trade Issues

        Q. Mr. President, if I may go back to trade, I would like to know
    what do you say to the French, who have decided that they won't sign
    anything regarding GATT at the Tokyo summit up until the United States
    lifted or the Department of Commerce lifted the sanctions of steel, and
    we insisted that the United States accept the principle of multilateral
    mechanism to solve commercial conflicts.
        The President. Well, those are two different issues. First of all,
    the action that was taken on steel was taken after a lot of
    deliberation, most of which was done before I became President,
    subsequent to United States law, which is clearly GATT-consistent. So, I
    think, you know, if the belief is that the United States has been wrong
    on the facts, then we can discuss the facts. But there is nothing wrong
    with our law, and it's not that different from the laws of a lot of
    other countries that are part

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    of the world trading system.
        Secondly, with regard to the trading mechanism, I have no problem
    with a multilateral mechanism to enforce trading agreements. But the
    GATT clearly contemplates that every country in the world, including
    France, should have the right to act in its own interest if the
    international system breaks down, which is not to say that you lose some
    rulings. But if there is no resolution of a crisis, the international
    system breaks down. All our Section 301 trade law does is to provide for
    some ultimate reservoir of authority for the United States to act
    unilaterally if the system itself breaks down. If France, for example,
    would like to propose a stronger multilateral decisionmaking process as
    a part of GATT before any country could act on its own, I would be more
    than happy to discuss that.
        I do not see this Section 301 as giving the United States the
    authority, for example, to decide on its own about all these trade
    agreements and how they affect us without regard to what other countries
    want to do. That is not at all the way it is supposed to operate. It's
    supposed to operate only against countries that are not part of trading
    agreements at all, so we don't have a trade--countries with whom we have
    no multilateral agreements, or when there is a total breakdown of the
    GATT system in this case.

    Germany's Interest Rate Reduction

        Q. Mr. President, you raised today for the first time, I think, the
    question and the very important question of the structural impediments
    to growth. And so far you have and your Government has somehow created
    the impression that Europe and the difficulties in creating jobs should
    be loaded at the doorsteps of the Bundesbank. And yesterday you even
    said, ``Well, this is a contribution to global growth.'' And you raised
    the expectation and the--that it was just a cyclical problem. Now, why
    didn't you come out before with this very strong statement that you are
    looking for structural impediments, that the G-7 should concentrate on
    doing away with structural barriers instead of pushing all the time the
    micro question--the macro question, excuse me?
        The President. Well, first let me say that I have not criticized
    Germany in the past, but I have complimented them when the Bundesbank
    has lowered interest rates. [Laughter]
        Q. But maybe for different reasons.
        The President. And I know that because I realize that, first of all,
    all nations with independent central banks--and the United States has
    one, too; that is, the Federal Reserve--independent of the--all nations
    that have independent central banks are very sensitive about political
    leaders from within the nation telling them what to do and even more
    sensitive to suggestions from political leaders outside the nation's
    borders. And so what I have attempted to do is to say repeatedly, ever
    since I became President, that I thought that the extent to which we
    could coordinate the economic policies with Germany and the rest of
    Europe, and Japan, that that was a good thing. Coordinated economic
    policies for growth, and expanded trade, and smarter internal,
    microeconomic policies were all necessary to create jobs and growth in
    the world.
        And when Germany--when the interest rates were lower a couple of
    days ago, I did applaud that because I think it makes a contribution to
    growth. But I think--and the only reason that I--and I have done it not
    to be presumptuous but only to say that the United States was asked for
    years by its allies to deal with our budget deficit. We are now doing
    that, and we are getting the results that we hoped we would. We have a
    20 year low in long-term interest rates, in home mortgage rates. We've
    had a 6 year high in housing sales. It's tailing off a little now but
    good housing sales. We've created more construction jobs in the first 4
    months of this year than in any similar period for 9 years.
        And the point I'm trying to make here is that there is a limit to
    what we can do for ourselves, and therefore what we can do for Europe
    and Japan in terms of buying more of your exports, unless all of us work
    together to promote growth. And obviously, because of the sheer size of
    the German economy and the power of Germany as an exporter, the
    condition of the German economy is critical to what happens to
    Americans. And you've had a very open trading philosophy. So I thought
    it was a positive thing, and I thought I should compliment it. But I
    think it's a delicate thing to talk about, because all of us who have
    ever suffered from runaway inflation have appreciated some measure of
    independence in our central banks. And yet all of us know that if the
    central banks are entirely insensitive to the economic growth

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    needs of the country, we can't coordinate the strategy. So it's a
    delicate matter. And I don't wish to be seen as interfering, but I think
    when a bank does something that's clearly a plus for the German people
    and for all the rest of the world, it's not wrong for an American
    President to compliment it.

    Note: The interview began at 10:45 a.m. in the Oval Office at the White
    House. Journalists participating in the interview were Graham Fraser,
    Toronto Globe and Mail, Canada; Alain Frachon, Le Monde, France; Carola
    Kaps, Frankfurter Allgemeine Zeitung, Germany; Rodolfo Brancoli,
    Corriere Della Sera, Italy; Osamu Shima, Yomiuri Shimbun, Japan; Jurek
    Martin, Financial Times, United Kingdom; and Paul Horvitz, International
    Herald Tribune. A tape was not available for verification of the content
    of this interview.