106. Memorandum From Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1
SUBJECT
- Pete Peterson’s Meeting with Ambassador Ushiba, Japan
Pete Peterson’s memorandum (Tab A)2 reports on his meeting of November 1 with Ambassador Ushiba. The major points are:
—Peterson asserted that we needed reform in the monetary system and that we had no interest in going back to the pre-August 15 situation. He added that there had to be a better mechanism for changing exchange rates when that became necessary.
—Ushiba indicated that Japan was clearly opposed to floating rates but would consider revaluation. Peterson stated that it would be helpful if Japan were to lift restrictions on the import of agricultural items, computers, integrated circuits, and aircraft. Japan’s reported intention to double its defense procurement in the U.S. over the next five years was also helpful.
—Ushiba said it would take time to achieve the sought after turnabout in the U.S. balance of payments, and asked what was needed immediately in the trade field in order for the surcharge to be removed. Peterson indicated that, in addition to the above items, a reduction of taxes on automobiles and the easing of various administrative procedures on imports would be useful.
—The Ambassador’s priorities for action by the U.S. were a ratification of the Okinawa treaty, removal of the surcharge, and an end to the discriminatory “buy American” provisions of the investment tax incentive.