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67. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter 1

SUBJECT

  • Japan’s External Surplus

We may be on the verge of substantial progress in regard to the Japanese surplus.

I spent the greater part of the day with Japanese Deputy Vice Minister for Foreign Affairs Yoshino, a highly responsible Japanese official who is my opposite member for Summit planning, discussing a package of Japanese measures to reduce Japan’s external surplus: reduction of barriers to imports; large purchases of US enriched uranium and of US grains for stockpiling in the US; greater Japanese aid and investment abroad; and an increase in the projected FY 1978 Japanese growth target from 6% to around 8%.

The latter is by far the most important of these measures; the FY 1978 growth target will need to be fixed in late 1977.

We agreed that if a package acceptable to both sides could be worked out, it would be useful to dramatize this success by having the matter agreed at a high political level. We talked of various ways in which this could be done; the best would be a CarterFukuda meeting. Yoshino said that if you could accept the Prime Minister’s standing invitation to visit Japan, this would create enormous pressure on the Japanese government to take the right decisions. Alternatively, he said, Fukuda might come to Washington—although this would be less desirable, since it was Japan that would be making the concessions.

I said that there could be no thought of a Presidential trip unless it was clear that a satisfactory package—including a substantial increase in the Japanese growth target—could be worked out in advance. He said that if he could tell the Prime Minister confidentially that a Presidential trip was possible on this condition, the Prime Minister could then make a political judgment as to whether he could overcome the considerable obstacles to developing a package such as outlined above. If so, he would let us know, and the modalities of extending and accepting an invitation could be worked out. Yoshino hoped that a Presidential visit could take place during your forthcoming trip, after Delhi [Page 229]or Brussels.2 If you could only come in 1978, the visit would still be a useful part of the scheme, but some of the package (notably the new growth target) would have been announced beforehand.

Comment: A Presidential trip to Japan that ratified a major package of measures to reduce the Japanese surplus would be a large foreign policy success. If your forthcoming trip could include such a visit, this would add notably to the trip’s importance. Even a 1978 trip would increase the chances of needed Japanese action, and could be related to that action. We need not fear that Fukuda would fail to deliver the package that he had promised as a condition of your visit; the domestic political costs of a Presidential visit that backfired would be prohibitive. If he issues the invitation, it will be because he has concluded that a package is politically feasible that would have the desired economic effect.

RECOMMENDATION

That I be authorized to tell Yoshino, before he leaves Friday3 night, that there is a good chance of a Presidential trip to Japan—either during your 1977 trip or later—if a major and mutually satisfactory package to reduce Japan’s surplus can be worked out in advance.4

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 40, Japan: 9–12/77. Confidential. Sent for action. Carter initialed “C” at the top of the page.
  2. Carter’s scheduled November trip was postponed; see footnote 3, Document 65.
  3. October 21.
  4. Carter did not indicate his decision with respect to this recommendation. At the end of the memorandum he wrote: “Zbig—Talk it over w/ Fritz & Cy. It is likely that in 1979 I’ll want to make a trip to Asia. Japan has a long way to go to convince me on their economic attitude. J.”