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

99. Memorandum From the Special Representative for Trade Negotiations (Strauss) to President Carter¹

Washington, January 26, 1978

SUBJECT

• U.S.-Japanese Economic Relations

While the joint communique with the Japanese on the above-captioned matter² is a dramatic breakthrough in setting some new directions and spelling out a new philosophical thrust for Japanese trade policies, it is only a first step. The extent of economic impact of the policies and measures that the Japanese agreed upon will be entirely dependent on our ability to constantly review their progress, both in terms of their efforts and their achievements.³

We had four main objectives:

1. Obtain formal Japanese commitment to a high level of economic growth. This, of course, was a unilateral, sovereign decision of their Government but was substantially influenced by your meeting with Minister Ushiba when he was in Washington⁴ and my continuing negotiations. There is reason for skepticism as to their ability to attain this target but at least it will make them aim higher and increase their expansionary measures if we continue to monitor.

2. To obtain their commitment to reduce their current account balance from the present surplus of $11 million. They agreed to reduce to $6 million during 1978 and to equilibrium the following year, if possible.

3. We obtained a Japanese commitment to achieve parity with us through the implementation of the Geneva trade talks in terms of their market being as open as our own. This to be accomplished over a period of years.

4. To immediately open the Japanese market to certain imports through a series of specific trade acts and measures.

While politically the ten-fold increase in beef quotas and the three-fold increase in citrus quotas made headlines here, in terms of meaningful, long-term, substantive trade significance to us, it is more likely that the Japanese pledges to reduce their barriers to parity in the MTN, to liberalize their foreign exchange control system, and to open up their government purchasing to foreign bidders are surely the most significant steps. What we can accomplish here remains to be seen and requires the monitoring to which I referred. Also very important is the work of our Trade Facilitation Committee set up by Juanita Kreps and headed by Frank Weil which has the job of helping individual U.S. companies get their products into Japan.⁵ Weil understands this problem and what needs to be done.

The bottom line, Mr. President, is that we have only set forth what they say they will do and now we need to put the necessary political will into the program or it will revert to what it was after a few “one-shot” purchasing deals.

It is my judgment you now need to instruct someone in the Government⁶ to begin and then follow through regularly, with vigor, on a continuing monitoring and review process, with periodic reporting to you and to the Congress.⁷

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 40, Japan: 1–5/78. No classification marking. A stamped notation reads: “The President has seen,” and Carter wrote at the top of the page: “Bob—Whom do you suggest? J.”
2. See footnote 3, Document 97.
3. During a January 26 Trade Policy Committee meeting, Strauss asserted “that Japan had made a very far-reaching statement on what was to be done in order to bring about an adjustment in her trade relationship with the rest of the world. At the same time, the statement resulted in very little in the form of concrete actions that would have an immediate impact. The value of the exercise will depend on the extent to which the political commitments in the communique are implemented by the Japanese government. The U.S. government will need to monitor Japanese policies on a continuing basis and to hold regular consultations with Japanese officials.” (Summary minutes of the Trade Policy Committee meeting, January 26; Carter Library, Staff Office Files, Council of Economic Advisers, Charles L. Schultze Subject Files, Box 88, Trade Policy Committee)
4. Carter met with Ushiba, Togo, Strauss, and Brzezinski in the Oval Office on December 15, 1977, from 4:35 to 4:45 p.m. (Carter Library, Presidential Materials, President’s Daily Diary) No memorandum of conversation was found.
5. See footnote 5, Document 92.
6. Carter underlined the phrase “someone in the Government” and drew a bracket in the margin adjacent to this paragraph.
7. In a February 21 memorandum, Carter instructed Strauss “to assume responsibility for ensuring that the Japanese take all reasonable steps to reach the goals contained in the January 13 Joint Statement.” (Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 40, Japan: 1–5/78)