Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

76. Memorandum From the President’s Assistant for National Security Affairs (Brzezinski) to President Carter ¹

Washington, undated

SUBJECT

• The Trade Issue in our Relations with Japan

On the eve of important negotiations with Japan on trade and economic issues² Mike Mansfield has sent in a general appraisal of our relations with Tokyo.³ As usual Mike registers some eminently sensible points. He warns against pressuring the Japanese with such zeal and single-mindedness on trade matters that we lose sight of the broadly convergent interests we share with Japan. He notes with some foreboding that grievances are accumulating on both sides of the relationship, and he underscores our own stake in maintaining cordial and mutually beneficial ties. He reminds us that we must pursue our economic objectives with a realistic awareness of the constraints that are built into Japan’s political system. We must avoid the impression that we are insensitive to Japan’s economic and political interests, and are giving little more than lip service to preserving our wider partnership with them. He suggests that we forego publicly lecturing the Japanese on our conceptions of their responsibilities. These are useful and timely reminders of important truths. We should bear them in mind.

They are not the only considerations, however, that should guide us in the weeks ahead. The Japanese have been derelict in meeting their international responsibilities in the economic field. Our discussions with them on this subject during the past nine months have produced nice communiques but few tangible results. Many Japanese leaders still regard their massive current account surplus and their bilateral trade surplus with us as cyclical problems which are likely to prove transitory. They are looking for short-term, cheap palliatives which will get us off their backs for a while in hopes that some other issue will emerge to divert our attention. Our most pressing requirement is to strengthen the hand of those within Japan who are prepared to contemplate far-reaching changes in their trade practices—particularly their attitudes toward the import of manufactured goods.

Japanese diplomacy on commercial issues tends to be reactive and defensive. Rapid movement toward equilibrium in Japan’s trade or current accounts will not come without the determined application of strong external pressures. And even those Japanese who find such pressures distasteful generally acknowledge that they are an indispensable prerequisite of change. We must apply these pressures adroitly, yet persistently, and we can anticipate some adverse fallout on our political relationship. This should be manageable. Indeed Japan’s concern to keep it within bounds will be one of our prime levers (just as it was one of Japan’s in the Tokai dispute).⁴ Our prospects of success will depend on careful and detailed exposition of what we want, persistence in seeking results, clear signals regarding the consequences of inaction, and some patience and good humor.

The diplomatic scenario for moving on this issue has now taken shape. Mansfield will make a strong presentation to Fukuda on Thursday,⁵ highlighting the importance we attach to early achievement of a deficit in Japan’s current accounts, and a substantial increase in Japanese imports of manufactured goods. A team, headed by Dick Rivers of Bob Strauss’ office, will then propose a package of short-term and medium-term measures to inject greater balance in Japan’s trade with the U.S. to the relevant Japanese Ministries. Fukuda will be informed that Alan Wolff will be prepared to go to Tokyo sometime in the next several weeks to move these negotiations along. Bob Strauss will be ready to go to Tokyo to conclude an agreement only if an acceptable package can be worked out. The timing is propitious. The Japanese are now formulating their next budget; they are exposed to criticism on the trade issue not only by the U.S. but the Europeans and non-OPEC developing countries; Fukuda has a strong hand in economic issues within the government, and he faces no early elections; the business community is apprehensive over further large-scale appreciation of the yen.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 40, Japan: 9–12/77. Confidential. Sent for information. Brzezinski did not initial the memorandum. Armacost sent it to Brzezinski for his signature under cover of a November 14 memorandum, in which he noted that the memorandum to Carter had been prepared at Brzezinski’s request. A handwritten notation on Armacost’s memorandum reads: “used in Weekly Report 11–18–77.” (Ibid.)
2. See Document 75.
3. Apparently a reference either to telegram 17287 from Tokyo, November 9, on the “State of the Relationship,” or telegram 17230 from Tokyo, November 8, on “US–Japan Economic Relations.” (National Archives, RG 59, Central Foreign Policy File, D770413–1018 and D770412–0041, respectively)
4. Reference is to the U.S.-Japanese disagreement over the opening of the Tokai Mura nuclear reprocessing facility in Japan. On September 1, the countries announced that they had reached an agreement that would permit the plant to open. (Andrew H. Malcolm, “U.S. and Japan Agree on Tokyo’s Opening of Atom Fuel Plant,” The New York Times, September 2, 1977, p. 1)
5. November 17. In the November 9 Evening Report to Carter, Vance noted that the EPG had tentatively decided during its meeting that day on U.S. economic strategy toward Japan (see footnote 2, Document 72) “that Mike Mansfield, using the personal relationship that he has built up with Fukuda, should begin the process with a private and frank talk with Fukuda.” (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 19, Evening Reports (State): 11/77)