275. Memorandum of Conversation1

PARTICIPANTS

  • Japan
    • Honorable Kakuei Tanaka, Prime Minister of Japan
    • Mr. Kiyohiko Tsurumi, Deputy Vice Minister of Foreign Affairs
    • Mr. Akitano Kiuchi, Secretary to the Prime Minister
    • Mr. Hidetoshi Ukawa, Ministry of Foreign Affairs (Interpreter)
  • United States
    • Ambassador William Eberle, Special Representative for Trade Negotiations
    • Ambassador Robert Ingersoll, U.S. Ambassador to Japan
    • Mr. T.G. Tsukahira, Political Officer, United States Embassy, Tokyo (Interpreter)

Ambassador Eberle congratulated the Prime Minister on his election victory and conveyed a personal message from the President. He also conveyed the importance the United States puts on the Japan-U.S. relationship. [Page 698]Mr. Tanaka after expressing thanks said he had just spoken to MITI Minister Nakasone and understood that the Hakone Talks had achieved about 60 to 70 percent of U.S. expectations.2 Ambassador Eberle replied it was a most useful meeting. The Japanese team, headed by Mr. Tsurumi, had been most cooperative. Both sides had worked well toward reaching understandings. One serious disappointment was the very limited progress made on the question of resolving the U.S.-Japan trade imbalance. Ambassador Eberle said that he did not want to be in a position of requesting or demanding that certain things be done; he wanted the problem thoroughly understood on both sides, and hoped that Japan would come forth with suggestions on our mutual problem.

Mr. Tanaka said that he had made clear from the outset that friendly relations with the United States was a matter of top priority with his administration. If the Hakone Talks had not been as fruitful as hoped he would want to continue to work on the remaining problems in a timely manner. His goal was to see a normal, expanding trade relationship between the United States and Japan.

Ambassador Eberle expressed appreciation for this view. The concern of the U.S. side is the trade imbalance. In our judgment, the trade balance is likely to become worse rather than better in the next two years because of structural factors in the Japanese economy. On this the U.S. and Japanese viewpoints differ. However, we do agree that problems remain to be resolved. It is important to deal with them now, and it would be in our mutual interest to find areas of further progress before the meeting in Hawaii on August 31.3

Mr. Tanaka said that since U.S.-Japanese relations are so very important it is essential not to allow the trade imbalance to increase and Japan would strive to reduce this imbalance and bring about a more normal relationship. However, it may be difficult to do anything significant by August 31. In the series of meetings held since last year—the cabinet level meeting in September, the San Clemente discussions,4 the Eberle visit in May, and now Hakone—there has been some progress each time. The next meeting (in Hawaii) should also show an advance. Mr. Tanaka said that he intends to see that the trade imbalance does not get worse and has already issued instructions that measures should be taken to reduce the balance below the $3 billion level by the end of this Japan Fiscal Year (March 31, 1973). He [Page 699]would point out, however, that looked at from a multilateral point of view, there is a balance of trade as between the four areas: Japan, Middle East, Oceania or Pacific countries, and the United States.

Ambassador Eberle said he completely agreed that the multilateral balance had to be considered, but wanted to stress that the U.S.-Japan imbalance was so great as to constitute a serious distortion of the total market. He said he appreciates the Prime Minister’s commitment to go below the $3 billion level in this Japan Fiscal Year. He urged that working party meetings be set up such as the team meetings agreed on enriched uranium, uranium ore, and related matters, and would hope that these could be decided on prior to August 31.

Mr. Tanaka agreed that it was a good idea to expedite meetings in the uranium and aircraft purchase areas. As for other matters, he would encourage maximum opportunities for exchange of views. Meetings between the two Governments should not always be negotiating sessions. Our fundamental aim should be to make the relations between the United States and Japan normal and healthy. Mr. Tanaka said it is fortunate that we have as U.S. Ambassador in Japan such a qualified person as Mr. Ingersoll and he hopes continuous discussion with minimum publicity could be carried on through him and his staff.

Ambassador Eberle said that on our side we agreed with the Prime Minister’s high regard for Ambassador Ingersoll. We also agreed with the Prime Minister’s view that there should be quiet talks on a continuing basis. The atmosphere or impression of confrontation is created by the press and is not useful. Ambassador Eberle again stressed that his basic aim had been to avoid a posture where the United States would be making demands and requests. He believed that Japanese side should also be making suggestions for solutions to the problem. It was no longer a matter of confrontations, but rather a matter of finding solutions together to our mutual problems.

Mr. Tanaka again said his basic policy was to keep U.S.-Japan relations on good terms and he believed that a continuing series of meetings was essential to deal with problems as they arose. If left too long, as in the case of the Japanese National Railways fare problem with which he is currently faced, problems become bigger, more conspicuous, and politically treacherous. He hopes he could keep continuous contact with Ambassador Ingersoll both official and personal and try to stave off problems before they became too large. Mr. Tanaka suggested that Ambassador Eberle might come to Japan more often, sometimes informally. Once a year visits give the press reason to make a fuss. Normal diplomatic channels should also be used more.

Ambassador Eberle agreed. However, depending on the problem, he pointed out that there is also need for technical discussions. Hence [Page 700]he urged the early organization of special teams for talks on uranium and related matters. Experts meetings in the agricultural field, computers, integrated circuits, and the Japanese distribution system are also desired. These are essential to improvement of our mutual difficulties.

Mr. Tanaka agreed on the desirability of such talks, and said we should keep in frequent touch. For emergencies, he noted, there is even the hot line linking his office with Washington directly.

Ambassador Eberle expressed his great respect for Ambassador Ushiba in Washington and said it would be possible to have continuing communication through him also. He stressed, however, that these normal links should be backed up by technical meetings and political talks on a selective basis as necessary.

Mr. Tanaka said both the possibilities for the United States Government and Government of Japan depend on upcoming elections and therefore understanding and support of the people were needed. These continuing discussions help educate the people, and this is essential. He believed that U.S.-Japan problems should be solved by promoting joint understanding rather than by “negotiation”.

Ambassador Eberle expressed agreement with this general philosophy but said there is a problem he believes is non-political. This is in the area of agricultural purchases where previously agreed upon percentages of the Japanese market have not been met, and the U.S. share has been unduly reduced. Increasing the U.S. share could conceivably give rise to international concerns but is not likely to be a domestic problem.

Mr. Tanaka said he agreed generally and would pursue a policy of increasing agricultural purchases from the United States. He said he understands in particular the orange problem, but pressures from local growers is a particularly serious problem. A good example of farmer pressures is the current problem of the rice price where the rice growers have exerted tremendous pressure on the Government. Mr. Tanaka recalled, however, that 15 years ago when it was proposed that Coca Cola and Pepsi Cola be allowed entry into the Japanese market there was powerful opposition from the cider and beer interests, but he had eventually pushed it through. He therefore believed that given time even these problems can be solved.

Ambassador Eberle said that since time was drawing short he would like to raise two final matters. First, he would like to make the point again that increasing the U.S. share of agricultural purchases would not be “abnormal.” (Japan would buy these products from abroad anyway.) The second matter was what should be told to the press.

Mr. Tanaka said that the press might be told that he said that the U.S.-Japan relationship is very important and that it was desirable that [Page 701]Japan buy more from the United States. Accordingly, steps would be taken to reestablish normal trading relationships through discussions by specialists in a spirit of common endeavor. He said that the press might be told also that he had noted that the United States had expressed appreciation that Japan had made positive moves at Hakone. A 100 percent solution was not achieved but both countries were constantly working toward a common goal and Japan had agreed to make efforts to improve the trade imbalance between the United States and Japan by increasing purchases to the extent possible and by other measures. Mr. Tanaka added that another point might be that he had mentioned the possibility of taking measures to stimulate the domestic economy so that Japanese imports would increase.

Ambassador Eberle said he would like to have it stated that Mr. Tanaka had made a commitment that Japan would work toward bringing the trade balance down. The U.S. press, he pointed out, feels that there is a lack of commitment to do this on the part of the Government of Japan.

Mr. Tanaka said to tell the press that his administration would devote its best efforts in that direction. He added, off the record, that he would want Ambassador Eberle to be assured that the Tanaka Government has just begun, but plans to be around for a long time, and it will work to improve the trade balance. He thanked President Nixon for his greetings and said he looked forward to his meeting with the President in Hawaii to renew a ten-year old friendship.

  1. Source: Washington National Records Center, Department of Commerce, Office of the Secretary of Commerce: FRC 40 77 A 85, Under Secretary File. No classification marking. Drafted on August 1, but no drafting officer is identified. The meeting was held in the Prime Minister’s office.
  2. Documentation on the U.S.-Japan trade discussions in Hakone, Japan, July 25-28, is in the National Archives, RG 364, Office of the Special Representative for Trade Negotiations: Lot 78 B 1, US-Japan Economic Discussions. For published documentation, including a memorandum of Kissinger’s conversation on economic issues with Tanaka in Karuizawa on August 19, see Foreign Relations, 1969-1976, vol. III, Documents 93 97.
  3. See Document 276.
  4. President Nixon and Prime Minister Sato met in San Clemente January 6-7, 1972; see Foreign Relations, 1969-1976, vol. III, Document 87.