[Weekly Compilation of Presidential Documents Volume 34, Number 47 (Monday, November 23, 1998)]
[Pages 2342-2347]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to American and Japanese Business Leaders in Tokyo

November 20, 1998

    Thank you very much. I have to practice saying ``Mr. Ambassador'' 
instead of ``Mr. Speaker.'' But I want to say first to Tom Foley how 
very grateful I am for his willingness to undertake this service in 
Japan.
    I think there could be no better evidence of the importance that the 
United States attaches to our relationship with Japan than the fact that 
in the last 6 years the United States has been blessed to be represented 
in Japan by former Vice President Walter Mondale and former Speaker of 
the House Ambassador Tom Foley.
    I am very proud of Tom Foley, who has guided and advised me. And if 
I'd listened to him more, I'd even done better. [Laughter] And I'm very, 
very grateful to him for his service here.
    I'm glad to see Glen Fukushima again, and I thank him for his 
welcome. And I thank him for his eagerness to get me to the platform. 
[Laughter] I wanted to come here today. I didn't intend to go anywhere, 
Glen. I was going to stay around. [Laughter]
    I thank Patsy Mink for her distinguished service and her 
introduction, as well as Senator Max Baucus and Congressman Neil 
Abercrombie, Congressman Earl Pomeroy, and Delegate Robert Underwood, 
and all the members of the Cabinet and administration who are here. The 
United States Government is well represented in this distinguished group 
this morning. I thank you for inviting me to speak and for the work you 
do at the forefront of the new global economy, where so much of 
America's prosperity will reside in the 21st century.
    Today I want to talk about the current international financial 
crisis, what we are doing about it, and the special role the United 
States and Japan must play to lead Asia and the world back to stability 
and growth.
    Of course, in part, the present difficulties are the product of our 
own successes. The world financial system fashioned at the end of World 
War II has played a central role in dramatically expanding trade, 
promoting prosperity, reducing hunger and disease throughout the world. 
But today, the sheer volume of economic activity intensified by 
technological change has created new risks, risks which are not 
adequately being managed today by many national systems or by the 
current international arrangements.
    The root of the problem lies in the sheer volume and speed of the 
movement of money, $1.5 trillion a day in international exchange 
transactions--far, far in excess of the total volume of trade in goods 
and services on any given day. In country after country we have seen 
rapid, large infusions of capital, often very highly leveraged, into 
banking systems and into corporations, without adequate balance sheets 
or risk assessments necessary for appropriate loan rates. Then we have 
seen the equally rapid withdrawal of the money, too often leading to 
enormous debt, devaluation, and dislocation, and ultimately into 
political crisis and, in many countries, great personal suffering.
    The collapse of communism, the rise of democracy, the information 
revolution, all these things have spurred people to seek the benefits of 
greater trade and investment. But in many places, institutions have not 
caught up with aspirations. Lack of openness, weak legal systems have 
bred irresponsibility and, on several occasions, corruption. They have 
fueled social unrest and, in turn, further economic instability.
    Now, I know these challenges are quite complex. But I am convinced, 
with responsible leadership from Japan and the United States, from the 
European Union, and from many developing economies, we can restore hope 
and spur growth. We can build a trading system and a new financial 
architecture for a new century if we act promptly, responsibly, and 
creatively.
    In September, after consulting with Japan and other partners, I 
called for specific and

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urgent steps to boost ailing economies, to halt the contagion, to 
restore growth and a long-term adaptation of the global financial 
institutions so that we can tame the cycles of boom and bust over the 
long run.
    Nations around the world have rallied to this common agenda. 
America, Japan, and other nations have cut interest rates. We at home 
have met our obligations to the IMF. We're providing credit and 
investment insurance to encourage capital flows into developing nations. 
Brazil is taking strong measures to address its fiscal problems and ward 
off the contagion. The international community has come through with an 
aid package to help.
    We have developed a precautionary finance facility designed to head 
off problems before they get started in countries that are vulnerable to 
economic unrest but have essentially sound economic policies. The World 
Bank and the Asian Development Bank will more than double their support 
to strengthen social safety nets across Asia to aid those who are 
suffering the most.
    Just a few weeks ago, Japan announced the Miyazawa Plan to address 
the central challenge, helping viable Asian banks and businesses emerge 
from crushing debt burdens. And just this week, Prime Minister Obuchi 
and I announced a new U.S.-Japan initiative to extend this effort. 
Together, we will mobilize new financing to recapitalize banks and also 
increase funding for trade finance and technical assistance.
    But nothing is so vital to world growth as ensuring that the United 
States and Japan, the world's two greatest economic powers, also do what 
is necessary to expand our own economies. For the United States, that 
means continuing the sound fiscal policies that have brought us to this 
point, investing more in our people and in our future, and continuing to 
work to open global markets.
    For Japan, of course, the challenge is even greater today because of 
the economic difficulties of the present and the last few years. But no 
people have done more in the last 50 years to overcome obstacles, to 
exceed expectations, to prove that they can adapt to new economic 
realities than the Japanese. The people of Japan turned a closed society 
into an open democracy. They built from devastation a robust economy 
that became an engine of growth for all of Asia. They have created 
products and technologies that have improved the lives of people all 
around the world, including the United States. They have been leaders in 
development aid to help other nations build their own prosperity.
    Even with current economic difficulties, Japan comprises 70 percent 
of Asia's economy. With others in the region still struggling, Japan--
and only Japan--can lead Asia back to stability and growth by meeting 
its own economic challenges.
    I want to be clear about something that I'm surprised there could be 
any doubt about: The United States wants a strong Japan, with a strong 
and growing economy. Japan's prosperity is vital to our own future. 
Already we have nearly $200 billion in annual trade and over $600 
billion invested in each other's economies. We have a strong political 
and security partnership which is vital to the peace of this region and 
the peace of the world and which, I am convinced, cannot be maintained 
over the long run unless our economies are also strong.
    Though the U.S. and Asia--indeed, all the world--will benefit from a 
revitalized Japanese economy, the greatest beneficiaries will be the 
Japanese people themselves, with new jobs, higher living standards, and 
a better capacity to deal with the looming issue of an aging population, 
a challenge that confronts virtually every advanced society in the world 
today.
    The keys to Japan's recovery are easy to articulate but, of course, 
more difficult to achieve: reform of the banking system to clear up the 
balance sheets, protect depositors, get good lending going again; an 
increase in domestic demand for Japanese goods and services; greater 
deregulation, investment, and opening of Japanese economies to create 
more jobs through increased competitive activity.
    Prime Minister Obuchi has announced a new package of tax cuts and 
funding increases to stimulate demand, and he has obtained passage of 
major legislation aimed at repairing Japan's banking system, legislation 
which must now be vigorously implemented.
    As America learned with our own financial crisis, involving our 
savings and loans--and

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those of you who were in America in the eighties know that we wound up 
closing over 1,000 of them--delay in a crisis like this only makes 
matters worse. By waiting too long to act in America, we increased our 
eventual cleanup cost by over 500 percent. Rapid, vigorous 
implementation of bank reform legislation, therefore, will make the 
banks more open and accountable, prompt them to sell off bad loans, get 
them back into the business of lending to those who can create jobs and 
opportunities.
    And rapid implementation of the economic stimulus plan is also 
important. Indeed, the people here may conclude that even more must be 
done to jolt the economy back into growth.
    I think I should say in light of the townhall meeting we did last 
night with Japanese citizens and the fascinating questions I was asked, 
that I was immensely impressed with the level of knowledge and interest 
of ordinary citizens in this country in the present conditions.
    And one of the things that I hope our visit here will do is to at 
least convince the Japanese people that the leaders of the United 
States--all of the Cabinet members, all of the Congress Members, the 
high White House officials, all of us who are here--we have every 
confidence that Japan is fully capable of restoring growth to this 
country and all of Asia, fully capable of mastering this challenge just 
as it has the challenges of the last 50 years.
    I think having that confidence in the mind of the Japanese citizens 
is absolutely key, over and above any Government program, any spending 
program, any tax cut program, any other kind of program, in convincing 
the citizens that they, too, have a critical role to play here in 
purchasing more goods and services in the domestic economy.
    Now, a high savings rate is a very good thing, especially for a 
country that's going to have a rapidly aging population. But in order 
for the society to work, Japan needs both a good savings rate and a 
robust economy. And jobs cannot be created unless someone is buying what 
the people who are working are producing.
    And so I hope that part of what has happened here will go beyond 
Government policy and that there will be a great debate among the 
citizens in this country about how they can have both the benefits of 
appropriate savings for their own retirement and the benefits of a 
growing economy by contributing in buying the products and services of 
the people who are going to work every day. Both will be required to 
deal with the challenges that Japan, the United States, Europe, other 
advanced countries face with an aging population.
    I also believe that Japan will benefit by going forward with efforts 
to increase outside investment and to deregulate key economic sectors. 
Primarily, let me say, given the present state of things, I think this 
is important because it can make a major contribution to job growth here 
in Japan.
    Just since 1993, when I took office and we began an aggressive 
effort on telecommunications which was culminated a few years ago by the 
passage of the Telecommunications Act, we have seen an enormous number 
of new jobs coming in to the American economy because of the 
telecommunications deregulation. Since we deregulated our domestic 
airline industry, we have seen tens of thousands of new jobs created. I 
am convinced the same thing would occur here. Yes, there would be some 
change and some disruption, but the net effect would be to create more 
jobs and better incomes and more stability for the people of Japan.
    We made real progress on our enhanced deregulation initiative 
earlier this year at the G-8 summit, and I think it is crucial that we 
make further progress by the time the Prime Minister and I meet again 
next year.
    We also have to do more on trade. Since 1993 the United States has 
been party to 260 trade agreements, opening global markets from 
agriculture to automobiles to create good jobs and lower prices for 
consumers. In 1994, at our APEC summit, the leaders resolved to create 
an Asia Pacific free trade zone by 2020, and we have made good progress 
in some areas, especially with our information technology agreement to 
erase tariffs on computer and telecommunications equipment.
    This week at APEC, we moved forward on the early voluntary sector 
liberalization

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initiative, to open trade in nine key sectors worth more than $1.5 
trillion a year by referring the process to the World Trade 
Organization. As all of you know, I'm sure, we had some differences with 
our friends in Japan on those issues, and we wish that they had been 
more forthcoming on all nine areas. But the most important thing now is 
that Japan play a leadership role in getting a WTO agreement in all nine 
sectors. This is very, very important.
    Again, I say, restoring growth in Japan and restoring growth in Asia 
need to be seen as interlocking objectives. This year the Asian ailing 
economies' exports to Japan are down by $13 billion. In America they're 
up by $5 billion. We believe that this is something that we have to do 
together.
    Let me say that I understand that every society has certain sectors 
which are especially sensitive to trade-opening initiatives. I also 
understand that even wealthy societies, and especially developing ones, 
face a constant conflict between the desire to get the aggregate benefit 
of an open economy and the gnawing fear that it will not be possible to 
maintain the social contract in the face of global economics and that 
this can undermine the solidity of communities and families and of 
society itself.
    The key, as I said in a speech to the WTO in Geneva a few months 
ago, is to involve all sectors of society in the process of setting 21st 
century trade rules, to make a commitment up front that there ought to 
be due account taken of the need to preserve the social contract to 
advance the health and well-being of people as trade advances, to make 
sure ordinary citizens benefit from advanced trade, to make sure we're 
improving the global environment, not destroying it, as we expand trade.
    We know that these things can be done. But the worst thing that can 
happen is if it appears that when times are tough, borders are closing 
up, other markets are being heavily penetrated in ways that can't be 
justified by economic forces, and then you're going to have, I'm afraid, 
a round of retaliatory protectionism. I'm quite worried about this now.
    We had a meeting early on when it was obvious to us that this 
economic difficulty in Asia was going to be very, very severe. And I 
made a decision with the full support of my entire economic team that we 
would do everything we could to leave America's markets as open as 
possible, knowing full well that our trade deficit would increase 
dramatically for a year or two. I did it because I thought it was a 
major contribution we could make to stabilizing the global economy and 
the economies in Asia.
    And so far, on balance, because our economy is continuing to grow, 
the American people and American political leadership have supported 
that. But if there is a perception of unfair trade, the consensus can 
disappear. You know this--I want this mostly to be a good news speech, 
but I have to say, in the United States now we have had this year, in 
one year, a 500 percent increase in the imports of hot-rolled steel from 
Japan and a 300 percent increase in the import of hot-rolled steel from 
Russia. No one seriously believes that this is solely because of 
changing economic conditions.
    And if you put that against an inability to open more markets, to 
have more investment, to have more deregulation, to have more market 
access, it will create in our country the potential for a retrenchment 
here in a way that will not be good for Asia or Japan or for the United 
States over the long run. So I say again, we want to keep our markets 
open, but we need fair, rule-based, disciplined expansions, and we need 
to avoid market penetrations that have no relationship to market 
factors.
    All of you in this room know a lot better than I do that it still 
remains extremely difficult for some non-Japanese businesses to succeed 
in the market here. We will continue to work for greater opening. But I 
will say again, I believe that what we're doing is not simply good for 
the United States; I think it's good for Japan as well. I would not come 
here and advocate any course of action that I believe was good for us 
but bad for Japan. That, in the end, is self-defeating.
    We should follow these policies only if they are good for our 
countries, both our countries, over the long run, and not only good for 
those of us who are in positions of decisionmaking but good for the 
ordinary citizens of our country, good for their future prospects, good 
for their ability to raise their

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children in a more secure and stable and prosperous world.
    So I say, the last point I want to make is let's not forget what 
this is all about. It's about more even than the success of your 
businesses, more than the profits that you might earn, more than the 
jobs you might have. It's about making it possible for citizens in free 
countries to pursue their chosen destinies, to live out their dreams, to 
give their children a chance to live out their dreams, to manage the 
tumult of the modern world in a way that seizes all the brilliant 
opportunities that are out there and deals with the challenges in a 
forthright and fair way.
    I believe that this is terribly, terribly important. Let me also say 
I believe that it is very important that Japan and the United States, as 
two great democracies, continue our partnership for peace and freedom. 
There are those who say, ``Well, all these global economic problems are 
inconsistent with democracy. Democracies can't deal with these issues. 
We need more authoritarian governments.''
    Well, if you look at the evidence, it contradicts it--that 
assertion. Many more authoritarian governments have financial 
institutions and processes that are insufficiently open. One great 
democratically elected leader, the President of the Philippines, 
President Estrada, said the other day, noting--he was referring to calls 
for greater open processes and greater openness in institutions, he 
said, ``Now when Alan Greenspan and the common people have the same 
view, we should listen.'' [Laughter] I wish I'd thought of that line 
myself. [Laughter]
    But if you look around the world, if you see the encouraging signs 
from Thailand to South Korea to eastern Europe to Mexico, you see that 
if people feel they have a stake in their societies, they are willing to 
sacrifice; they are willing to take responsibility; they are willing to 
give their governments leave to make decisions that are difficult today 
because they are right for tomorrow.
    And so I say also, I hope that on this trip the United States and 
Japan will reaffirm what we have in common: our support for democracy, 
our support for openness, our support for the march of peace and freedom 
as well as the return of prosperity to Asia and the rest of the world.
    In closing let me say, we have to have your help in all this. You 
know that. The private sector has a critical role to play if we're going 
to address the broad challenges of global change and the challenges of 
the financial crisis. All of this you understand, I'm quite sure, better 
than I. We need your creativity, your entrepreneurial strength. We need 
your sustained, direct investment in emerging markets, your support for 
training, health care, and good workplace conditions to ensure a strong 
work force and stable, broad-based support for open markets and global 
free enterprise.
    Above all, right now, in every country, we need your leadership to 
support creativity and change. The world is different, and it is 
changing at a rapid rate. Inevitably, economics changes faster than 
politics. And yet, in the end, if we want stable societies and 
successful economics, we must have good politics. You can help us to 
achieve that.
    President Franklin Roosevelt once said, ``True wealth is not a 
static thing.'' How well we know that. It is a living thing, made out of 
the disposition of people to create and distribute the good things of 
life. We must find the right formulas to make this living thing grow 
stronger. Over a generation of extraordinary progress, the people of 
Japan have shown what is possible.
    Now it is the challenge of Japan and the United States, working at 
home and working together, to fulfill this promise, to restore stability 
to this region, growth to this country and to the world. I am absolutely 
convinced that the 21st century can be the best time humanity has ever 
known. I am more optimistic and idealistic today that I was the day I 
first took the oath of office as President in 1993. But I am also 
absolutely convinced, as my daughter's generation says, that denial is 
not simply a river in Egypt. [Laughter] We know what the challenges are, 
and we have to find the means to meet them. If we do, we will be richly 
rewarded.
    Thank you very much, and God bless you.

Note: The President spoke at 10:25 a.m. at the Capitol Tokyo Hotel. In 
his remarks, he referred to Glen S. Fukushima, president, American 
Chamber of Commerce in Japan; Delegate Robert

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A. Underwood, of Guam; Prime Minister Keizo Obuchi of Japan; and 
President Joseph Estrada of the Philippines.