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Exports Not the Answer, Bush Tells Japan

Asia: President advises visiting Premier Mori to deal with domestic issues to improve nation's economy.


WASHINGTON — President Bush met with Japanese Prime Minister Yoshiro Mori on Monday, but the leaders did not come up with any specific measures to revive growth in the world's two largest economies.

Senior U.S. officials said Bush advised Mori that Japan should not try to stimulate its economy by increasing exports--an approach that might harm American industries, such as automobiles, that compete with Japanese firms.

Instead, White House aides said, the president emphasized that Japan should deal with its long-standing domestic economic problems, particularly corporate debt and nonperforming loans.

Bush and Mori met at a critical juncture for the weakening economies of both nations. In recent weeks, U.S. stock markets have plunged; Japan, meanwhile, appears to be heading into recession once again.

However, there was no indication that the economic discussions between Bush and Mori went beyond generalities, or that they had resulted in any new commitments by either government.

Asked whether Mori had agreed that Japan should not try to export its way out of its economic doldrums, a senior Japanese official who for diplomatic reasons asked not to be named replied that there had been no direct response from the prime minister.

The impact of the summit was undercut by Mori's political weakness. His public approval ratings have fallen to single digits, and he has indicated that he is likely to step down soon as prime minister.

Timing Emphasizes Japan's Importance

The timing of Monday's meeting was dictated less by economic factors than by the formalities of broader U.S. diplomacy.

Bush is scheduled to meet with visiting Chinese Vice Premier Qian Qichen later this week. The administration, which is committed to giving new emphasis to the U.S. alliance with Japan, didn't want to welcome Qian to the White House before having a top-level meeting with Mori.

Bush's first summit with a Japanese prime minister stood in marked contrast to the comparable event in the Clinton administration.

When President Clinton took office, he spurned overtures from Tokyo for an early summit with then-Japanese Prime Minister Kiichi Miyazawa.

And when the Japanese prime minister finally was welcomed at the White House in April 1993, Clinton staged what amounted to a public confrontation over the mounting U.S. trade deficit with Japan.

On Monday, Bush and Mori had no news conference, and both governments appeared to go out of their way to emphasize a theme of harmony.

In a joint written statement, Bush and Mori said they "reaffirmed the strength of the bilateral relationship" between the United States and Japan. They said the ties between the two countries are "rooted in friendship, mutual trust and shared democratic values."

Mori also went out of his way to support the Bush administration's position on the need for missile defense.

"Japan shares with the United States the threat perceptions stemming from the proliferation of missiles," said the senior Japanese official. "And Japan has embarked upon . . . a joint research program with the United States on theater missile defense, and would like to continue to do so."

U.S. Slowdown Causes Worry

In the discussions about the economy, Japanese officials seemed eager to lay to rest the dynamics of the late 1990s--when the United States, bolstered by a booming economy, held America out as a model and lectured Japan about the need for change.

"It is not only Japan that has problems," said the senior Japanese official. "The U.S. has problems too."

Mori made it clear that Japan was worried about the downturn in the United States. He said he hoped that the U.S. government "will take appropriate macroeconomic measures to deal with a U.S. economy that is slowing down."

U.S. officials later said Bush emphasized that the way out of Japan's economic problems is not through exports but through "strong domestic growth brought about by deep structural reform--regulatory reform, in particular, as well as opening up to foreign direct investment."

While previous U.S. administrations have also pushed for economic and banking reforms in Japan, Bush administration officials said Monday that they were encouraged that this time Japan seemed to be taking the American appeals seriously.

Both U.S. and Japanese officials said Mori had appealed to Bush for understanding of the problems caused by the U.S. military presence in Okinawa, where about 26,000 American troops are stationed.

Aides said Bush and Mori also discussed the incident off Hawaii in which a U.S. Navy submarine hit and sank the Japanese fishing vessel Ehime Maru.

In a bid to prop up its economy, Japan's central bank reverted to a zero-interest policy.

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