A Post-Birmingham Look at U.S.-Japan Relations: Ambassador Thomas Foley

Speech to Kyodo K.K. Kisaragi-Kai

May 29, 1998

Akasaka Tokyu Hotel

Thank you Mr. Inukai, for that very kind introduction. It's been just over six months since I arrived in Japan as the American ambassador - eleven months to the day after my distinguished predecessor, Fritz Mondale, returned to the United States. During this past half year, I have traveled throughout Japan, met old friends, made a number of good new friends, and have had the chance to exchange views with them about the future of Japan and the future of the U.S.-Japan relationship. I hope that after my remarks, we'll also have an opportunity to have a discussion and exchange views in a candid way.

I'm grateful for the opportunity to come here today. I know this is a distinguished audience in a very long tradition, going back to 1950 and nearing a half century, of offering an opportunity for speakers to appear before a distinguished and knowledgeable Japanese audience to discuss matters of current affairs and interest.

I first came to Japan in 1969 and returned, usually every year, sometimes more than once a year for almost 30 years. As a young congressman visiting Japan was a very different experience than living here and serving as the ambassador. One aspect of Japanese culture I've always admired is how well so many old Japanese traditions have prevailed despite the dramatic changes this country has gone through in just one generation. I'm also struck with just how close our two societies and economies have grown since I first came here in 1969.

American culture and products have found a welcome home in Japan, as Japanese products have found a welcome home in the United States. American retailers sell the popular, casual, American lifestyle here, and they have been doing tremendous business in Japan. Apparel and outdoor goods companies such as L.L. Bean, Eddie Bauer and Timberland are opening up new stores throughout the country, following great success in their mail order businesses. You see people in the streets more casually dressed and spending more time with recreational activities, both young and older Japanese. This is a positive sign, and a reflection of how much has changed.

I thought this casual trend would extend throughout the country. I recently was invited to attend a race meeting in Japan. I found at the turf club, former ambassador to the U.S. Okawara and I and one or two other Americans were casually dressed, as we are at the race track in the United States. But many Japanese chose to wear dark blue suits, with a vest and a white shirt and a dark tie and white handkerchief! Not much different than you see going to the business office in Japan. I made a little joke that sometimes I still think Japan is so formal that I have an inclination to wear a tie when I go to bed at night.

But Japan is changing and those circumstances, the formality, which have so much a part of Japanese official and business life are gradually changing as well. Though I don't think there are many cases of what we call "casual Friday" in Japan, where people come to the office or government or business wearing casual clothes or sports clothes. That may come, but not yet perhaps.

It's obvious that American music and movies have also had a great success in Japan. You see people going in and out of Tower Records here. You see long lines of people waiting to see the movie "Titanic," one of the latest great hits of Hollywood in Japan. It apparently is the largest grossing film ever to be shown in Japan. In fact, when my wife and I tried to see "Titanic," we bought tickets and waited in line for a while and then were told it was standing room only! And so we upgraded our tickets to reserved seats because I wasn't likely to stand for three and a half hours.

But American music, American clothing and lifestyle products, from McDonalds (or Makudonarudo, as they say here) to other areas of consumer service and products, have had an impact on Japanese life. And in the United States, that cultural exchange is a two way street. Japanese products from Nintendo to autos, and Japanese food, from sushi to tempura, have become part of American popular culture. More recently, Japanese stars are pitching in the American major leagues, and Japanese engineers are designing innovative cars in Detroit. Japanese films like the recent film "Shall We Dance?" have been greeted with great success in American theaters. I saw that very charming Japanese film and everyone in the audience applauded at the end of the movie. That's very rare in the United States. People applaud plays, but not movies. It's an example of the cross cultural exchange of both products and culture -popular culture, particularly - that has had an impact in both societies. The latest example is "Godzilla," which originated in Japan and is co-produced by Sony Pictures Entertainment and Toho. Thirteen thousand people attended its premiere last week at New York's Madison Square Garden.

These may seem to be superficial things but they reflect the gradual integration of our economic systems and societies. Our economies are growing increasingly integrated and mutually interdependent. The most recent example was seen in Birmingham, where the President and the Prime Minister endorsed measures to deregulate Japanese markets in telecommunications, pharmaceuticals and medical devices, financial services, housing and retailing. These measures, the fruit of our joint efforts in the U.S.-Japan Enhanced Initiative on Deregulation and Competition Policy, which began at the time of last year's Denver Summit, have been agreements which will bring about considerable benefits to Japanese consumers and new opportunities for Japanese companies, as well as American and other foreign companies. The advantages include:

-- more affordable, diverse and safer housing that will aid Japanese consumers through the elimination of discriminatory standards and regulations in housing codes and will allow more American lumber into Japan;

-- lower telecommunication charges which will decrease Japan's domestic and international telephone bills to be more in line with other developed, industrialized countries, by reducing interconnection rates for foreign telecommunication services;

-- relaxed restrictions in Japan's satellite broadcast services market, which will offer savings and greater choice, with the number of channels broadcasters can provide to Japanese consumers possibly doubling;

-- and a streamlining of the approval process for new drugs from 18 months to 12 months, which means that the Japanese will have quicker access to innovative, cost-effective medicines.

This is going to be increasingly important as Japan moves into a demographic change that has come on very quickly - a change that will make Japan the oldest and fastest-aging society in the OECD. The ability to have access to modern pharmaceutical developments will not only insure life-saving and disease-eliminating opportunities for Japanese citizens, but, in addition to that, will enhance the quality of life of a rapidly aging population. The President and the Prime Minister pledged to continue our important work under the Enhanced Initiative in the coming year with further deregulation, adding the energy and power sectors to their list of sectoral targets.

Another important agreement that was announced by the President and Prime Minister in Birmingham dealt with electronic commerce. Both our governments recognize the advantages of working together to promote global electronic commerce, which will be an engine of growth in the next century. Through close policy coordination and bilateral discussions, the U.S. and Japan will keep electronic commerce - that is the business conducted via computers through the Internet - duty-free and safe, with effective privacy protections.

But our growing ties and the pace of change have led some to worry that foreign firms are taking advantage of the weakened Japanese economy by investing heavily in this country. I think this concern is misplaced.

First let's look at the numbers. In 1996, foreign direct investment in Japan totaled only 0.8 percent of the nation's gross national product, as compared to 8.3 percent for the United States. In the same year, Japan`s overseas investment was 48 billion dollars, while total foreign investment in Japan was only 7 billion dollars. There is a long way to go before foreign investment in Japan begins to reach the level of other OECD countries.

I believe Japan's leaders clearly recognize the benefits foreign investment can bring in terms of new services, greater competition, lower prices, and more jobs. In the United States today, almost 6 percent of our total employment comes from companies that are foreign owned companies, many of them Japanese. And an overwhelming number of these jobs are above average, some very much above average, in terms of wages and benefits.

Given our close relationship and the importance of our two economies, it is no surprise that the Birmingham Summit saw the U.S. and Japan participate actively in the discussion concerning the role the Group of Eight in restoring Asia to a path of sustained economic growth. President Clinton praised Japan's 16 trillion yen stimulus package. This package of tax cuts and public spending should be a major factor in bolstering Japan's ailing economy. A strong Japanese economy is in the interests of not only Japan, but of Japan's neighbors in Asia and in the world. As Prime Minister Hashimoto has emphasized, Japan's most effective contribution to recovery in Asia will be promotion of its own domestic demand-led growth. In this way, we hope that Japan can become an engine of growth for the entire region, to be so again as it has been in the past.

A critical element of improving Japan's economy is reform of the banking and financial system. President Clinton and Prime Minister Hashimoto discussed this problem in detail in Birmingham. During our own experience, that is, the experience of the United States in dealing with our savings and loan problem in the 80's, we learned the importance of taking decisive actions and resolving serious banking problems sooner rather than later. We recognize that resolving systemic banking problems, particularly in a weak economic environment, is a difficult challenge. It took us several tries to resolve our banking problems in the 80's and 90's and to eliminate the delays that made the solution very costly. I hope Japan will rapidly put in place a program that will put this problem behind it.

I'm confident Japan will overcome its financial problems as we have overcome so many of our long-standing bilateral trade problems. One just has to look at the aviation market. After years of negotiations, earlier this spring we agreed on terms that will increase cargo and passenger traffic between our two countries. The immediate result was lower airfares and a greater choice of flights. The agreement has opened up new markets to competition, lessened distorting government regulation and intervention, created new opportunities for companies in both countries, and perhaps more importantly, has provided better service for customers and citizens of both countries. Several airlines recently announced their intention to lower airfares from the United States to Japan to almost half of what they were last summer - and this during the peak season, when tickets are usually the most expensive.

In some ways, I realize Japan does not receive the credit it deserves for its efforts. Japan certainly deserves more recognition for its contributions to financial stabilization programs in Asia and we appreciate our close cooperation in responding to current Asian financial difficulties. Japan, for example, has pledged between thirty and forty billion dollars in secondary IMF funding and other assistance to Asian countries. And I think that fact needs repetition, both in Japan and in the United States, as well as throughout Asia, because it is the largest contribution that any country has given in this kind of bilateral assistance, and it is worthy of praise and recognition. But again, to repeat the point that we have made so many times - and also has been made so many times by Prime Minister Hashimoto - beyond even this very important contribution, the restoration of the Japanese economy itself would be of the greatest possible benefit, not only to Japan, but to Asia and to the world.

Japan has also funded major projects in Bosnia, the Middle East, and Central Africa and has contributed funds and troops to U.N. peacekeeping operations in Cambodia and in the Golan Heights. It is vital to global peace and prosperity that Japan continues to fund and implement such efforts.

A key area for coordination between our two countries is enhancing the sense of community and cooperation in the Asia-Pacific region. Japan has undertaken an ambitious effort to improve its relations with the Russian Federation, and we warmly support this effort. Both of our countries are working to strengthen our ties with China. Our mutual endeavors will help a rapidly changing China to accept the benefits and responsibilities of full membership in the international system. And that is in everyone's interest. We also consult closely on how to manage the problem of North Korea, which remains the most serious potential threat to regional peace.

I like to repeat these facts to American and Japanese audiences, to emphasize them. The United States and Japan constitute 40% of the world's gross domestic product, 40% of world trade and 40% of the world's development aid. The number one and number two donors in overseas development aid are either Japan or the United States, depending usually on currency values. But, the fact of the matter is that, per capita, Japan has been a much more generous and forthcoming country in overseas development aid than has the United States. And that also needs to be recognized.

The U.S.-Japan Global Partnership, established by President Clinton and Prime Minister Miyazawa in 1993 (the so-called Common Agenda), marked its fifth anniversary this past March. This exciting initiative has brought together government agencies, private businesses, international organizations and NGOs in many different sectors. By applying resources, experience and knowledge, we have helped to eradicate diseases in Africa and the Western Pacific, improved educational facilities in Central America, promoted substitute crops to reduce the production of narcotics in South America and protected fragile nature reserves throughout Latin America, the Caribbean and the Asia-Pacific region. We've cooperated in science. We've eliminated disease. We've protected the environment. By working together, the United States and Japan have accomplished much more than either of us could accomplish alone. And usually, not always, but usually, focussed on areas that are global problems that involve many more people than just the populations of our two countries. In fact, in many cases, (it's) a very unselfish reaching out to resolve problems in countries and areas that do not have the resources, capacity or energy to undertake the solutions alone.

Being overlooked, however, is of concern to many Japanese, who have expressed concerns about the so-called Japan-passing. There has also been quite a bit of discussion recently about how other countries should best present their views about the policy issues Japan faces. As I have indicated, Japan's actions can affect everyone else on earth. You have tremendous influence. So it should not come as a surprise that the U.S. and other countries offer their views on what Japan might do in the way of policy choices. This is not new. It is, by the way, something that Japan has done in reverse. I remember when U.S. officials were urging Japan to stimulate its economy in the late 1970's. I also remember the 1980's when Japan was encouraging the United States to curb its budget deficits and bring its financial systems under control. In that same spirit, we are now urging Japan to restore domestic demand-led growth through fiscal stimulus, deregulation and financial reform. These are the consequences of, among other things, our close relationship, of the membership in the G-7, of the international interdependence of major economies, and should not be taken as "interference in internal affairs." They are matters of cooperative effort that each of our countries must undertake because of the size and importance of our contribution to the international economic condition.

Earlier this month, I was in Washington, where I caught up with the pulse on Capitol Hill, the White House and the State Department. There is concern about the magnitude of the economic challenges that Japan faces. But there is also a growing conviction that Japan is dealing very seriously and forthrightly with its problems and that these efforts will be successful. I think there has been a time in recent months when there seemed to be some irritability creeping into our relations, because of the frank discussions that we have had over economic matters, in particular. But I am satisfied that the coming months, since Birmingham and beyond, will be marked by a closer and closer association of our policies and a warmer sense of cooperation and common objectives. This is something that I have sensed in recent weeks very dramatically, from the time of the Birmingham Summit. Of course, it is an anticipated event of importance that the President has invited the Prime Minister to come to Washington, D.C. in late July on a state visit, where there will be an opportunity for full-ranging discussion of our common issues and concern - and, I am satisfied, a splendid opportunity to restate in face-to-face meetings the importance of our relationship for the future.

Frequent bilateral consultations are essential for two countries of our size and close relationship. The exchange of views is always valuable and at the recent meeting in Birmingham between our leaders, we were able to conclude many of the commitments that had been made earlier. I'm very pleased that Prime Minister Hashimoto in his coming visit to Washington will be able to further those talks. Secretary of State Albright, who just one month ago met with Foreign Minister Obuchi here in Tokyo, met with him again soon after in London. Indeed one of the reasons why my job is such a busy one is because we do receive, I'm grateful and pleased to say, many official visitors from the United States. Not only from the executive branch, but from former colleagues and staff members from Congress as well. I always welcome these opportunities because it give us a chance to discuss recent events in Japan with our colleagues and to understand better events that are taking place in Washington at the same time. I spent twenty-five years very actively engaged in promoting U.S.-Japan parliamentary relations. We are both important democracies. The feature of our democracies is that we have government dictated by the people, and by their choice for representatives in the Diet or in the Congress. Face-to-face meetings between parliamentarians, I think, are of great value in our relations, and I have encouraged it at every opportunity, and will continue to do so.

In the end, the true measure of success of U.S.-Japan relations is this kind of personal, people-to-people exchange. Not only between parliaments and between presidents, not only between people that know each other so well that they address each other as Bill and Ryu, but between thousands of tourists and students and business persons who travel between our two countries every day. This is the foundation of our strong bilateral relationship, perhaps more than any other. I'm happy that these sorts of exchanges are thriving. A few years ago, the Mike Mansfield fellowship program was started, which brings together middle level American officials to spend not just a few days or a few weeks, but a full year working alongside their Japanese colleagues who manage similar issues in Japanese ministries. Another binational effort is the Fulbright Memorial Fund, which brings American teachers to Japan for three-week study tours and will result in greater interest and better understanding of Japan on the part of American students at the elementary and high school levels. About 45,000 Japanese students are studying in the United States today, while the United States has more sister city and sister state agreements with Japan than with any other nation. All of these examples take us beyond the headlines and sound bites, beyond the possible misrepresentations and misunderstandings, to bring our two peoples closer together. I want to see the number of U.S. students studying in Japan increase. One of the great problems is that we have an imbalance between 45,000 Japanese students in the United States and only about 1500 Americans here in Japan. The language problem - the language "challenge" perhaps more correctly put - is one of the reasons, I think, that some American students are reluctant to come to Japan. But that itself is changing. More schools are teaching Japanese at elementary and secondary levels than ever before, and Japanese is becoming a language which more Americans speak with some proficiency than ever before.

Let me conclude by saying that the U.S.-Japan partnership is strong and thriving. We have difficulties to overcome, but as any friend or ally would, those difficulties are best addressed by candid discussion and talking over our mutual problems to seek compatible solutions. My first half year as American Ambassador in Japan has been enormously rewarding, enjoyable and challenging. I am deeply conscious that I follow a very distinguished number of American ambassadors to Japan, going back many, many years. I am living in a house where the echoes of their service are present everyday. Before I came to Japan I spoke with every living ambassador that I had a chance to meet and talk with. Fritz Mondale, obviously, and Mike Armacost and the great Mike Mansfield, whom I saw last month when I was in Washington. He is, by the way, ninety-five years old and as bright and active and alert as he ever was when he served here. He is a remarkable man. I take it as a model that American ambassadors who serve in Japan live a very long time. I hope to follow in that tradition as well. It is for all of us who have served here an enormous honor. When I was a young congressman, one of the Speakers at the time, John McCormack, said to us when we began our congressional service "If the day ever comes when you come to the Capitol and you are not enormously thrilled, when you see the Capitol dome and you lack that sense of what a great honor it is to represent half a million or 600,000 of your fellow citizens . . . . If that day comes, quit! Just quit, because you've stayed too long."

An even greater honor for me, after years of congressional service, is to come to Tokyo as a representative of the President and 270 million Americans. Japan has sent very distinguished ambassadors (to the U.S.) from Ambassador Saito back through a long lineage of people who have spoken with great effectiveness and with great sincerity and with great competence of our relationship, and the importance of maintaining and advancing it in the next century. I hope to be part of that effort. I am confident that the present problems, the present difficulties of any course that develop in our relationship, will be minor compared to the strong bonds of friendship, association and partnership that will guide us in the next century, as they have in the last half of this century. Thank you very much for the honor and pleasure of being here today.