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

SUBJECT

  • Japanese Surplus

1. The US inter-agency exercise sparked by your recent exchange of letters with Fukuda 2 has borne fruit: An inter-agency group is on its way to Tokyo to outline to the Japanese government a possible package of short-term measures and long-term commitments that it might take to reduce and eventually eliminate the Japanese surplus.3 It’s a good package—the right balance between pressure and sensitivity to Japanese concerns. If subsequent discussions go well, Bob Strauss will visit Japan in early December to seek an agreement on all this with Fukuda.

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2. Some indication of how seriously the Japanese take this issue is provided by Prime Minister Fukuda’s decision at a special Cabinet meeting Saturday4 to set up a Special Headquarters for Foreign Economic Policy, answering directly to him; Yoshino, who brought Fukuda’s letter to you and with whom we had the discussions of Japan’s surplus that I reported to you,5 will be its Secretary General. This move lifts the surplus issue out of the bureaucracy to the highest political level. It does not tell us how the Japanese will react, however. They seem more alert to our concerns than previously. But there is still a considerable battle to be waged inside the Japanese government before a decision can be reached. That battle may be fought out in public and the US may be implicated, if different groups in that government resort to press leaks. But we’re on the right course, and I think there’s a fair chance of success.

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 40, Japan: 9–12/77. Confidential. Sent for information. Carter initialed “C” at the top of the page.
  2. For Carter’s letter to Fukuda, see Document 71. For Fukuda’s letter, see footnote 2, Document 70.
  3. On November 9, the EPG discussed economic strategy toward Japan; no minutes of the meeting were found, but see footnote 2, Document 72.
  4. November 12.
  5. See Document 67.