55. Memorandum for the Files1

After a lengthy discussion of textiles, initiated by Miyazawa, he expressed willingness to see “what can be worked out.” This statement was not a commitment but more of a side comment, but clear enough.

Earlier in the discussion there was considerable comment about the manner of conducting negotiations. This has apparently been highly unsatisfactory on both sides partly because there have been many different negotiators. On this point Miyazawa asked who he should communicate with if something were worked out and the response by the Ambassador was to the American Ambassador in Tokyo.

It was clear that Secretary Stans is by this time in poor standing with the Japanese and probably cannot take any further effective role in these negotiations. At the same time, Miyazawa did not seem overly impressed with the Ambassador’s evident desire to highly channeled negotiating procedures. He referred to Don Kendall and Rex Reed as old friends,2 men of good faith and honesty and stated directly his resentment of the Ambassador’s unfriendly comment about Miyazawa’s discussion with these gentlemen. Perhaps more than anything else, Miyazawa is concerned about the elusive piece of paper presumably representing an agreement by the Prime Minister with the President.3

There was considerable discussion about the rise of protectionism in the United States and the way in which the textile negotiations played a part in the development of the Mills bill. While concerned about protectionism, Miyazawa seemed resigned to it and did not seem to think any action on textiles now would have much impact. He referred to this as a swing of the pendulum and could not see how this swing would be altered by any Japanese actions. His stated motivation in trying to work out some agreement on textiles was therefore [Page 156] based almost exclusively on the grounds of clearing up any ambiguity in the point of honor of Prime Minister Sato.

If something is to be worked out in textiles, it may come through the negotiations being promoted by Oliver Long.4 The Ambassador is pushing this approach. I would say this would not necessarily be the case and is certainly not particularly Miyazawa’s view.

Other points discussed during this long evening were the following:

1. Miyazawa is organizing a program (the machinery is about prepared) for controlling exports when they rise above a 20% annual rate of growth. This proportion was challenged as being on the high side, but whether it is or not depends on the narrowness of the product category definitions.

2. He agrees that liberalization of trade and investment opportunities in Japan is desirable but is absolutely opposed to alteration of the 50% ceiling on foreign investment.

3. The question was raised about the uses of the rapidly building foreign exchange surplus. Foreign aid is one obvious use but Miyazawa emphasized industry arguments in favor of use of these resources to acquire control of raw materials abroad. This point was strongly confirmed during our discussion the next evening with business leaders. Their explanation of rising productivity in Japan rested in significant proportion on access to raw materials of high quality. The importance of large ships was stressed.

4. Much of Miyazawa’s conversation carried an overtone of concern about Japan. Complimentary comments about the work pace and drive we observed were met with the observation that this drive causes deep resentment abroad perhaps to the point of hatred. At the same time he notices a shift in attitude among youth away from the nation-oriented “idealism” that characterized his younger days toward a more inquisitive and materialistic set of attitudes.

5. He raised questions about the flexibility of rates of exchange among currencies as a substitute for the more direct management of trade. Apparently he has only limited access to discussions of this subject.

The impression we have is that the Japanese government has not effectively organized the subjects of trade, monetary development and aid so that they can be managed in a cohesive way.

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I have read over the draft telegrams prepared by the Ambassador reporting on the evening and I think that they are a good summary of the discussions.5 My only point of exception would be to the strong emphasis on the Oliver Long proposal as the vehicle for further textile negotiations. This may be the right vehicle but a bilateral agreement might well fit better Miyazawa’s concern about the Prime Minister’s point of honor.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 400, Subject Files, Textiles, Vol. IV, Jan–Dec 1971. Prepared by Shultz who is reporting on a conversation between himself, Ehrlichman, Meyer, and Miyazawa. Ehrlichman also produced a memorandum on this meeting, which is attached but not printed.
  2. Donald Kendall, was the President and CEO of Pepsi-Cola, a friend of Richard Nixon, and the Chairman of the Emergency Committee for American Trade. No participant in the textile issue by the name of Rex Reed has been identified. Shultz may be referring to Ralph Reid, who had served in the American occupation of Japan, knew Miyazawa, and served as an intermediary between Miyazawa and Stans during mid-1970.
  3. Shultz is referring to rumors of a secret agreement between Nixon and Sato during the November 19–21, 1969, summit between the two leaders. For Nixon’s and Sato’s textile discussion at the summit, see Documents 31 and 35.
  4. Oliver Long, Director-General of GATT, had met with Miyazawa in May 1970. See I. M. Destler, Haruhiro Fukui, and Hideo Sato, The Textile Wrangle: Conflict in Japanese-American Relations, 1969–1971 (Ithaca: Cornell University Press, 1979), pp. 189–191, for additional information.
  5. On September 21 Meyer sent a telegram reporting on this meeting with Miyazawa. (Telegram 7490 from Tokyo September 21; National Archives, RG 59, Central Files 1970–73, INCO FIBERS 17 US–JAPAN) No other telegrams from Meyer relating to this discussion have been found.