WASHINGTON — President Reagan gave Japanese Prime Minister Noboru Takeshita the strongest pledge to date that the United States will resist any further decline in the value of the dollar and praised Takeshita's defense and economic policies in a meeting at the White House on Wednesday.
Reagan, however, prodded the new Japanese leader to open his nation's markets to more U.S. farm imports and to allow American construction companies to participate in public works projects in Japan.
In a joint statement, the two leaders announced that new arrangements have been made to ensure adequate funds to support the dollar, which lost 21% of its value against the yen last year. Gains in the yen's value make Japanese goods more expensive on the world market, undercutting the competitiveness of Japan's exports.
The Plum of His Trip
Takeshita and other Japanese officials made it clear that they regard the agreement to stabilize exchange rates as the plum of the trip for the new prime minister, his first to the United States since taking office Nov. 6.
"The stability of exchange rates is indispensable" to achievement of economic goals shared by both nations, Takeshita said in a statement to reporters.
For the United States, the gains were more amorphous.
Reagan, who spent 2 1/2 hours with Takeshita despite having suffered an episode of nausea and vomiting that kept him up much of the night, said that he was "pleased" with Takeshita's assurance that talks would be reopened on providing "in a satisfactory manner" more access for the U.S. construction industry to Japanese public works.
Japanese barriers to U.S. firms' participation have frayed relations already strained by Japan's trade surplus with the United States.
Offer Called 'Framework'
However, a senior Administration official said that the Japanese offer amounted to only a "framework. It doesn't itself resolve all the problems involved."
On the question of Japan's import quotas on 12 agricultural products, the official, who declined to be identified, cited Takeshita's "forward attitude" in moving toward removing them.
In remarks to reporters in the East Room of the White House, Reagan said that the session helped the two leaders establish "an excellent personal rapport," although he mangled the pronunciation of Takeshita's name (pronounced Ta-KAY--shta) in his comments.
Ichiro Ozawa, deputy chief Cabinet secretary, told newsmen that in their talks, the two leaders generally called each other by their first names--Ron and Noboru--in the fashion of the "Ron-Yasu" relationship that Reagan and Takeshita's predecessor, Yasuhiro Nakasone, established.
Issue Joint Statement
A joint statement issued by Reagan and Takeshita on exchange rates declared that "a further decline of the dollar could be counterproductive"--wording that Makoto Utsumi, director of the Japanese Finance Ministry's international finance bureau, described as unprecedently strong coming from the President himself.
In the past, the Administration has issued vague signals on its position on the dollar, sensitive to the consideration that while the decline unsettles the financial markets, it makes U.S. goods more affordable overseas.
Utsumi said financial officials of the two countries set no specific exchange rate as a goal but added, "This (statement) makes it very clear that anything below the present rate (for the dollar) is unacceptable."
The dollar closed at $1 to 127.23 yen on the New York Foreign Exchange Market Wednesday, down slightly from Tuesday's 127.45.
The Finance Ministry official said the two countries have made new arrangements to guarantee that both the Bank of Japan and the Federal Reserve Bank of the United States would have sufficient funds to intervene in exchange markets to support the dollar.
Interest Rate Offer
In exchange for the strongly implied American commitment to intervene forcefully to support the dollar, Japan offered its own implied promise "not to resist any decline" in (its) short-term interest rates and to refrain from raising other interest rates, a senior Reagan Administration official said.
Reagan said he was "especially pleased" with Takeshita's "global economic perspective" and praised as "significant" Japan's plans to expand domestic demand and stimulate growth. The United States has been pressing Japan to take steps to increase Japanese imports of American goods.
Reagan also praised increases, outlined in Takeshita's first budget, in foreign aid, defense spending, and financial support for the 60,000 U.S. servicemen stationed in Japan.
He even offered a word of support for Japan against criticism that its rising military budgets--now slightly larger than $30 billion--might threaten to transform Japan once again into a strong military power.
"Japan's national defense program is entirely consistent with the concept of self-defense and in no way poses any threat to others," he said.
Desire to Ease Tensions