44. Memorandum From the President’s Assistant for Economic, Commercial, and Financial Issues (Flanigan) to President Nixon 1

Economic Relations with Japan

In the attached memorandum and paper, Secretary Stans presents his views on our present economic relationship with Japan.2 He expresses his concern that economic and financial considerations have been subordinated to geopolitical and military factors in the development of our policies regarding that country. Neglect of these considerations in our overall policy-making may account for unsatisfactory results in recent trade negotiations with Japanese officials. He believes that continued rapid economic growth in Japan will increase the importance of these economic considerations and the weight they should be given in the development of our long-term policies and relations with Japan.

As background for a major re-examination of policy which he feels is necessary, Secretary Stans has initiated studies on Japanese government–industry–banking relationships and the Japanese import control regime to determine their impact on U.S. trading and investment interests. He will report when these studies are completed and on further actions he feels should be taken. Treasury has similar studies underway on the impact of current Japanese economic and financial policy on the international monetary system and the U.S. balance of payments.

I do not believe that you need to read his memorandum.

PMF
  1. Source: National Archives, Nixon Presidential Materials, White House Central Files, Box 43, [Ex] CO 75, 1/1/70, 1 of 3. No classification marking. Sent for information.
  2. Attached, but not printed, is a May 18 memorandum from Stans to Nixon. An unattributed paper entitled “Japan’s Economic Growth: The Basic Anatomy,” from April is also attached but not printed. This paper provides the basis for Stans’ May 18 memorandum. It raises the prospect that Japan will achieve “world economic supremacy” through a combination of hard work, a skilled labor force, intelligent policies, neglect of the public sector, and a disregard of international obligations.