99. Memorandum of Conversation1

PARTICIPANTS

  • Prime Minister Kakuei Tanaka of Japan
  • Ambassador Nobuhiko Ushiba
  • Hidetoshi Ukawa, Chief, Second North American Section, American Affairs Bureau, MOFA (Interpreter)
  • President Richard Nixon
  • Mr. Henry A. Kissinger, Assistant to the President for National Security Affairs
  • Mr. James J. Wickel, American Embassy, Tokyo (Interpreter)

SUBJECT

  • Prime Minister Tanaka’s Call on President Nixon

[Omitted here are an exchange of pleasantries and discussion of the Emperor’s visit to Alaska and of former Prime Minister Sato.]

The Prime Minister then recalled telling Dr. Kissinger recently that constant contact, both official and unofficial, is very important.

Dr. Kissinger noted that the Prime Minister said this is important in both the political and economic fields.

The Prime Minister recalled, in connection with economics, that he also said Japan must have a strong American economy. The fundamental [Page 256]view of the GOJ is that American prosperity means Japanese prosperity. While the current economic problems could not be resolved in one move, he expressed the belief that constant communication, with meetings between officials and experts every month if necessary, while keeping watch on long-term trends would lead to a smooth solution satisfactory to both sides.

The President noted that one of the reasons he appointed Ambassador Ingersoll is that we need in Japan a businessman with a good economic background. The Prime Minister, he noted, has not only achieved success in business but has the further qualification of having served as Finance Minister and Minister of International Trade and Industry.

The Prime Minister said that he appreciated the appointment of Ambassador Ingersoll, who could foresee problems in all aspects of the relationship, not just economic ones. It was, he said, a happy choice, since he is an expert in economic affairs. The Prime Minister said that he knew Ambassador Ingersoll many years before, having met him through David Kennedy, when he was still head of Continental Illinois. He noted that he had, as Finance Minister some years ago, approved the establishment of Continental Illinois’ branches in Tokyo and Kobe.

The Prime Minister cautioned that trade negotiations through government channels only tended to develop into item-by-item negotiations, and pointed out that it is more effective to have consultations between specialists, with a view toward expansion of long-term balanced trade to the mutual advantage of both countries. Therefore, he appreciated the fact that Ambassador Ingersoll does not confine himself to official contacts with himself and the Foreign Minister, but also speaks broadly to the business community in Japan, which understands him so well.

The President said that he knows negotiations to resolve the great imbalance in our trade are difficult. He is glad to hear there is some progress. He also understood that the counterparts are discussing the technical points in the other meeting.2 He emphasized that a skilled and experienced politician would understand that the present trade imbalance might appear to be advantageous to Japan, but if allowed to grow could lead to rising protectionism in the Congress. We should understand, he said, that it is in our mutual interest to resolve this trade imbalance as much as possible so as to prevent any move toward restriction issues, but rather to provide for freer trade, which is in the interest of both Japan and the United States, which are great economic powers. He realized that some Japanese businessmen, like our own, would [Page 257]tend to take a negative attitude toward any actions taken which they thought would result in a detriment to their own short-range interests. However, in viewing the long-term, he stressed that we as political leaders must create conditions which encourage the reduction of barriers. This, he said, we can do only if the members of the Diet and of our own Congress are convinced of the long-term interest to both countries of redressing the balance. Japan’s businessmen and manufacturers are competitive and efficient, he said, and our own businessmen and manufacturers have that reputation. Therefore, we should welcome competition, and as political leaders he said both of us should do all we can to see that barriers are not raised. Therefore the GOJ moves to reduce the present trade imbalance would have, he believed, a salutary effect on both public opinion and in the Congress.

The Prime Minister said that an excessive imbalance in trade did not serve either nation, and is undesirable. Therefore, he wished to do his best to reduce the current imbalance. Japan would make specific efforts to reduce the imbalance, in order to continue to benefit from expanding trade. However, he did not believe this matter could be solved in half a year, or a year. Having served as Minister of Finance some three years, as an LDP policy-maker, and also as Minister of International Trade and Industry for a year, he felt he is qualified as an expert. While in office, therefore, he said he wishes to bring about an “ideal situation.” While continuing to consult between governments, he said the Government of Japan would also continue its efforts to persuade business to accept necessary measures.

The Prime Minister added that the President’s term of office is four years, but his own term as LDP President is only three.

The President said that he is young, the youngest to serve as a Minister and also to serve as Prime Minister.

The Prime Minister said that he was also the youngest man to serve as a Diet member, but pointed out that long life does not depend on chronological age. While the President could serve eight years, he could serve as LDP President only six years (two three-year terms).

The President asked if that is all he could serve.

The Prime Minister replied that this is all, unless LDP party regulations are amended, or unless he stepped down after two terms and later ran for another term.

The Prime Minister said that he views Japan-U.S. economic problems as being important. Therefore, he has been meeting with Ambassador Ingersoll, and Ambassador Eberle, and wishes to bring about some conclusion. Japan’s entire post-war economic recovery has been based on the dollar, he said, and therefore the maintenance of the value of the dollar and continued growth of the American economy are [Page 258]also in the interest of Japan, insomuch as these contribute to the maintenance of world peace and the position of the free world. Japan, he said, wishes to cooperate in the interest of expanding the American economy.

The President said this is mutual. A strong, healthy Japanese economy is in our interest. He realized that Japan has a special problem with respect to playing a military role in the Pacific and Asia, but Japanese economic influence could be decisive in many areas. Therefore, it is in our interest that there be a strong, vigorous Japanese economy, so that Japan could play a vital role in Southeast Asia, which would help develop the whole region, and would be decisive. He commented that the Prime Minister would read in the press statements reflecting the feeling by some of our political leaders and businessmen that Japan is a serious competitor to be dealt with, but noted that he does not share their feelings. Healthy competition benefits both nations, he believes, except, of course, when the trade imbalance is too great.

The Prime Minister said that he wished to discuss the healthy balance of trade noted by the President. Within two or three years Japan wishes to restrain its surplus on current account to one percent of GNP, which would be used to finance economic aid of one percent of GNP to the LDCs. Moreover, of that amount the Government of Japan wishes to reach the ideal level of 0.7% of governmental developmental assistance as soon as possible. It is said by some that Japan has attained economic affluence, he said, but this is not true. There is an excessive concentration of population in urban centers, such as Tokyo and Osaka, which gives rise to many problems like pollution and inadequate housing. Japan lags behind the United States in social capital formation, he said, and great investments are needed for social capital and to improve living conditions. Thus, great domestic investments must be made, as well as large contributions to economic assistance to the LDCs. He said that the Government of Japan hopes to move forward toward realizing both goals.

In this connection, the Prime Minister added that Japan should cooperate with the Southeast Asian nations and the ROK in providing both aid and investment. When the tensions in Vietnam have been reduced, he said that Japan should also provide aid and investments to help stabilize the lives of the people. He noted Japan’s promise at UNCTAD 3 to attain the goal of governmental aid of 0.7% of GNP by the end of the decade. This would equal the entire budget to support the Government of Japan Defense Forces. While this is a difficult objective, he said the Government of Japan should tell the people this aid is essential, [Page 259]and gain their understanding. With the cooperation of the United States over the past quarter of a century Japan has achieved great economic progress and Japan now wishes to assume a larger burden in contributing to peace and the development of the LDCs, on the basis of full consultation with the United States.

[Omitted here is a discussion of relations with the EEC, Vietnam, and China.]

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, VIP Visits, Box 926, Tanaka Visit 31 Aug-1 Sept. Secret; Sensitive. The meeting was held in the Presidential Suite of the Kuilima Hotel. According to the President’s Daily Diary, the meeting ended at 3:15 p.m. and was followed by a meeting of the principals with their official delegations. Kenzo Yoshida, Director General of the Asian Affairs Bureau, Ministry of Foreign Affairs, participated on the Japanese side in Ambassador Ushiba’s place. (Ibid., White House Central Files)
  2. The results of the trade negotiation were announced in Honolulu on September 1; see footnote 4, Document 98.
  3. UNCTAD III convened in Santiago, Chile, in April 1972.