In order to strengthen the Japan-U.S. relationship, an essential prerequisite is that both countries' economic foundations be solid. Our highly interdependent economies account for some 40 percent of the world's total output, clearly indicating how important the healthy economic development of both Japan and the U.S. is to the stability of the entire global economy.
Today, however, Japan is struggling to get a full-fledged recovery going. Even as the prospect of an aged society looms ahead of us, our national debt continues to expand, and uncertainty about the future spreads throughout the economy. Adding to the malaise, unnecessary regulations constrain efforts to restore economic vitality.
Now more than ever, in order to correct its high-cost economic structure, Japan must proceed with ongoing structural reforms, including administrative and fiscal system reforms, quickly eliminate and ease regulations and increase efforts to open its economy further. To date, Japan's deregulation and market opening largely have been carried out in response to "gaiatsu"--external pressure from the United States and other countries. Henceforth, it is vital that our country proactively undertake reform on its own volition. Our government must exert strong political leadership, and the business community must do what it can in support of these reforms, accepting whatever pain may accompany structural reform for the sake of future growth and stability.
Since the latter part of the 1980s, Asian countries such as China, members of ASEAN (Association of Southeast Asian Nations), and India, have leveraged deregulation and foreign investment to achieve remarkable economic development. Global attention should remain focused on this region as the center of economic growth well into the twenty-first century.
The development of this region on the basis of market economic principles represents a great opportunity for Japan and the United States. The two countries should maintain an open and frank dialogue, at both the government and private levels, on the Asian issues that concern them both. While differences in opinion may arise occasionally, we must transcend these differences and enhance bilateral coordination in the region. We in the Japanese business community intend to promote a lively bilateral exchange of views with our American counterparts, and to work towards increased mutual understanding on Asian issues.
In addition, the APEC (Asia-Pacific Economic Cooperation) forum offers a multilateral venue for Japan and the United States to deepen their dialogue with the other countries of the region and to promote the liberalization of trade and investment. Both countries must work at furthering the APEC dialogue process. The business community should insert its opinions into APEC's deliberations through such vehicles as the APEC Business Advisory Council.
Japan-U.S. cooperation is essential for the sake of the region's stable development. This is especially so in the case of China. The two countries must work together to maintain and develop harmonious relations with China to ensure regional stability.
A strong U.S. presence in Asia is particularly necessary in the political and security arena. The Japan-U.S. bilateral security arrangements play an important role in confirming the American commitment. Based on the April 1996 Japan-U.S. Joint Declaration on Security, the private sector should carry out frank discussions on what sort of contribution our countries can make to promote Asian stability. Business leaders should clearly recognize the importance of security issues and take an active part in these discussions.
Supported by revolutionary advances in information technology, business is becoming globalized and borderless. This is making it easier for corporations to choose the most appropriate sites around the world for their production and sales bases, regardless of where their headquarters are domiciled, and to direct their business activities at consumers across the globe. Companies are actively pursuing strategic alliances, mergers, equity tie-ups, technological cooperation, and joint research, regardless of nationality; they are both competing and cooperating with each other in a global marketplace.
To ensure the healthy development of this global marketplace and the smooth operation of business, it is essential that existing systems and rules concerning trade, investment, and other aspects of business, be harmonized, and that new, shared rules are created in a way that fully reflects the concerns of the business world. It is crucial for Japan and the United States to take the initiative in the international rule-making process, giving full respect to the great diversity among nations.
The World Trade Organization, inaugurated in 1995, is the most important international institution for the future of global trade. Japan and the United States must cooperate to enhance the effectiveness of the WTO, and they must work within this organization to further improve the rules governing international trade and investment. When the two countries find it difficult to settle issues between themselves through bilateral negotiations, they should make use of the WTO's dispute-settlement mechanism. In such cases, it is important that they strictly observe the decisions reached there, thus affirming the WTO's authority.
Membership for China in the WTO will signify that country's arrival as a key participant in the operation of the global economy. Japan, working in close coordination with the United States, should encourage China to fulfill the necessary conditions for WTO membership so as to be able to join soon, extending cooperation as appropriate.
In addition, in connection with the soon to be expected conclusion of the Multilateral Agreement on Investment (MAI), Japan needs to review its own systems and laws pertaining to investment and harmonize its investment conditions with those of the rest of the world.
Along with the harmonization of trade and investment rules, the maintenance of stability in the international monetary system is also a requirement for the global economy's healthy development. Toward this end, Japan should take urgent measures for the sweeping liberalization of the Tokyo financial markets, including ahead-of-schedule implementation of the "Japanese Big Bang" reforms, and promote the internationalization of the yen.
We expect that Japan and the United States will cooperate to correct distortions in the global market economy that might deter its healthy development. For example, our governments and private sectors should work together to promote the economic growth of developing countries, helping them to improve their industrial infrastructure, consolidate their legal systems, foster their human resources, and overcome poverty, so that they can take their place as active participants in the global market economy.
Rapid worldwide industrialization raises concerns about environmental degradation and shortages of energy and food. To deal with such global issues, it is important for Japan and the United States to promote the development of advanced technologies, environmental preservation know-how, and clean energy sources, and to work to increase food production. Bilateral cooperation in connection with this "Common Agenda" is one of the planks of the two countries' Framework for a New Economic Partnership, and should be further promoted.
By actively offering technology and private sector expertise, we in the Japanese business community aim to assist in economic development and the achievement of the Common Agenda.
In order to prevent tensions from growing between Japan and the United States, it is essential that we widen the channels of bilateral communication between politicians, businesspeople, and citizens -- people at all levels -- and deepen mutual understanding. If such a relationship is built, even if problems arise, it will be possible to settle them through talks based on mutual trust.
Japan and the United States have become more interdependent, but still trade, investment, residents, visitors, and students flow overwhelmingly more in the direction of Japan to the United States than vice versa. Furthermore, when compared with the Japanese media's coverage of the United States, American media coverage of Japan is extremely limited. To build a healthy bilateral relationship, it is essential for many Americans to have a better, more correct understanding of Japan.
To this end, Japan must be made more transparent, and it must be transformed into a truly attractive society from the perception of others. At the same time, Japan should make efforts to increase the numbers of Americans versed in Japanese affairs. For example, to expand the opportunities offered to Americans with a budding interest in Japan, the Japanese government and private sector should cooperate to create invitational programs for the young politicians and businesspeople who will lead the United States in the twenty-first century. They should also develop a system of support for students from abroad comparable to the Fulbright scholarship. At the least, the government should improve the environment for private sector mutual exchange activities by implementing tax incentives and easing conditions for visas.
Keidanren is determined to foster the bilateral relationship of mutual trust between Japan and the United States by strengthening its own network of exchanges with American business and industrial organizations, research institutions, and nongovernmental organizations. Working in cooperation with the Keizai Koho Center (KKC) and the Council for Better Corporate Citizenship (CBCC), our federation also wishes to expand its support for local informational and educational activities on Japan and for grass-roots social contributions and cultural exchanges by Japanese affiliates in the United States.