Transcript: Ambassador Foley's Remarks at Japan Foreign Correspondents' Club

Speech by Ambassador Thomas S. Foley
At Foreign Correspondents' Club of Japan
Tokyo, Japan

April 9, 1999

I am delighted to have this opportunity to appear before the Foreign Correspondents' Club of Japan to speak about the relationship between the United States and Japan. First, allow me to state my basic premise: the U.S. and Japan enjoy a close, sound and friendly relationship built on a bedrock of shared values and common interests. Together we have nurtured over the past 50 years a security relationship that underpins peace and stability in the region, and economic ties that are central to our mutual growth and prosperity. I firmly believe the strong bonds that bring us together will continue to sustain us as we move into the next century.

That continuity is important. But so is the ability of our two nations to adapt to rapid change.

The fall of the Soviet Union and the end of superpower confrontation removed an enormous tension from the world. Yet it did not bring peace and stability, as we have seen in crises from Pyongyang to Baghdad and from Cambodia to Kosovo.

The fall of communism also sparked new interest in powerful market-oriented economic policies and, together with major technological advances, created a new, fast-moving global economy. An increasingly integrated world economy has provided unprecedented opportunities for growth. At the same time, it increases the importance of having sound economic policies in place, as the events of the past two years have made clear.

As the world changes, so must the U.S.-Japan relationship. For example, in the economic area we are continuing to pursue a vigorous trade policy aimed at increasing market access for competitive American companies. But at the same time, the U.S. and Japan are enhancing our cooperation in areas of special relevance to the new challenges we face, such as regulatory reform, measures to improve inward investment, and steps to address the economic and social consequences of the Asian financial crisis.

Likewise, in the security field, we are consistently improving our ability to defend Japan and the region while being sensitive to the impact on Japanese citizens of our military presence, particularly in Okinawa, so that both nations can continue to enjoy the strong support we receive from our peoples for this crucial endeavor.

Today I would like to focus on two specific areas where we are working together to forge even stronger bonds critical to our efforts to maintain a vibrant, dynamic relationship that can meet the challenges before us. One is economic regulatory reform, and the other is military readiness and training, an important part of our security relationship.

Regulatory Reform and Job Creation

The first topic I would like to discuss is our joint efforts to promote a rapid domestic demand-led economic recovery and vigorous, sustained growth in Japan. Perhaps no other economic issue is more important for our two countries and the region.

We welcome the large fiscal packages the Japanese government has put in place. It is important now that Japan use all available macroeconomic policy tools to support economic activity until recovery is firmly established.

As the Japanese government looks for ways to restore growth, we are convinced that regulatory reform is central. This is because the current problems facing the Japanese economy are not simply cyclical but also structural. The Japanese economy is not generating new business and employment opportunities at a sufficient rate to replace the reductions in capacity and employment that are taking place in many sectors of the economy.

Many leading industrial nations are discovering that protecting jobs through regulation doesn't work. Instead, they are adopting policies which help create new jobs. In the United States, for example, 1.5 million more new jobs were created than were lost in our open and deregulated economy. Japan lost almost a million jobs last year, but excess regulations along with general economic weakness meant that it created far fewer new ones. Clearing away these regulatory obstacles and creating an environment which will promote new business formation will create the new jobs Japan needs.

The U.S. and Japan have joined forces to promote these kinds of reforms. Our Enhanced Deregulation Initiative is aimed at developing regulatory reforms which will increase market access and improve Japan's competitiveness. And our bilateral Investment Talks are identifying steps Japan can take to improve the environment for investment. We hope to announce joint reports in the coming weeks which will include significant concrete steps in both areas, which will benefit both Japanese and American companies and their workers.

I often hear the argument that: "Yes, the Japanese economy needs fewer regulations and more structural adjustment, but we can't do this now, at a time of high unemployment." That argument is simply false. What I want to emphasize to you today is that Japan's unprecedented, high level of unemployment is precisely the reason why deregulation is needed NOW.

Experience has shown that pro-competitive regulatory reform, by opening up new opportunities, boosts investment, creates new jobs, and restores economic competitiveness.

For example, in Japan, liberalization of cellular phones in 1994 led to a new booming market in cell phones and related equipment, creating new business opportunities and many new jobs. There are now about 40 million handsets in use in Japan, a boon to Japanese manufacturers, retailers, and service companies. This so-called "concession" to America did indeed benefit some American suppliers of equipment, but the major winners, by far, were Japanese companies, workers, and consumers.

The ambitious program to reform the Japanese financial system - the Japanese "Big Bang" - will create new growth and opportunities in the financial sector.

Already, both domestic and foreign firms are creating new joint ventures and planning the introduction of new products to take advantage of the Big Bang reforms.

Financial reform has been a critical part of America's success. Indeed, in the past 20 years, the U.S. financial services industry has grown twice as fast as U.S. GDP as a whole, and the securities industry has grown by 10% per year. And that is only part of the story. By providing low-cost financing to new businesses more efficiently, reform also led to higher rates of growth (and more jobs) for the entire economy.

Aviation is another sector where deregulation has led to job-creation. The U.S.-Japan civil aviation agreement concluded in January 1998 has increased the number of trans-Pacific flights, thereby creating new jobs. United Airlines, for example, is hiring 600 Japanese flight attendants to staff flights into and out of Narita Airport. In the United States, as a result of civil aviation liberalization, jobs in that sector grew twice as fast as the economy as a whole.

These are the sort of benefits that come with deregulation. Japan has made some progress in this area, but much more remains to be done. For example, despite the job-creating success of the cellular phone sector which I mentioned earlier, in the Japanese telecommunications area as a whole - a sector which is booming almost everywhere around the world - investment has actually fallen over the past two years. A business environment which does not promote competition is the problem.

Japan's inability to attract significant numbers of new entrants in this sector is dramatically seen in one statistic: in the first nine months of 1998, the U.S. approved more than 700 new international service authorization licenses; in the same period, the Japanese Ministry of Posts and Telecommunications approved fewer than 20.

The result has been high telecom costs which in turn have discouraged the development of a vibrant and competitive information industry. "E-commerce," for example, is stimulating new business investment and creating many new high-paying jobs in the U.S., but is barely developed in Japan.

Let me mention another sector - health care - which is a major area of economic growth in the United States and Europe. With the world's fastest aging society, Japan's market potential in this sector is huge. However, Japan's inefficient, costly distribution system, outmoded drug and medical device approval processes, restrictions on hospitals and nursing homes, and inefficient insurance reimbursement regime mean that little new investment is going to this sector. Moreover, the Ministry of Health and Welfare is considering establishing a health insurance reimbursement scheme - the so-called reference pricing system - which will further impair the introduction of innovative pharmaceuticals and undermine the quality of care. We believe market mechanisms should be used as much as possible to improve service, reduce costs, and at the same time create new investment opportunities and jobs.

Of course, as deregulation opens up new areas of economic activity, rigorous enforcement of the Antimonopoly Law is essential to prevent private parties from reversing the benefits of reform. The Japan Fair Trade Commission must have the resources and institutional strength to fulfill its function as chief enforcer of the Antimonopoly Law and advocate of competition. The U.S. has enjoyed a long and fruitful relationship with the JFTC. We hope to enhance that cooperation in the coming weeks with the conclusion of an antitrust cooperation agreement along the lines of arrangements we have with Canada and the EU.

These are only a few examples of the areas where our two nations are working. We will continue to work closely with Japan to promote a "job-creating" agenda which focuses on regulatory reform, an investment climate which attracts productive capital, including foreign capital, and an open market where foreign firms can freely compete.

Cooperation on Military Readiness

At this point, I would like to turn to another area central to U.S.-Japan relations: our security cooperation. The foundation of the overall bilateral relationship - the U.S.-Japan Mutual Security Treaty - not only guarantees the security of Japan, but, by providing for the forward deployment of American military forces, underwrites peace and stability throughout the Asia-Pacific region.

North Korea's dispatch of spy boats into Japanese waters recently, not to mention its launch of a ballistic missile over Japan last August, should remind us all that dangers and uncertainties still exist right here in this region.

Security is not free. It can only be preserved if young men and women are prepared to defend it with their lives. The U.S. and Japan have agreed that their military personnel will fight together, if necessary, to preserve peace and security for Japan and the areas surrounding it. Under the Mutual Security Treaty, Japan provides to the U.S. base facilities so that our young military personnel can meet this responsibility, and this is certainly one of Japan's most important contributions to the security of the entire region.

A key role of our bases here is to ensure that our soldiers are prepared for any contingency. We cannot ask our young people to risk their lives without adequate training; nor can we be confident of our defenses unless we know our soldiers are well-trained.

Our forces stationed here work hard to be good neighbors. Indeed, we have adjusted several areas of training to lessen the impact on Japanese citizens. But, at the end of the day, readiness still requires training. And like athletes or musicians, the U.S. military can only maintain critical capabilities through repeated practice. Proficiency is gained through practice; regular training means safe training.

Since training activities sometimes make the news, I would like to take a moment to explain how we have worked to minimize their impact, focusing on some key areas, such as night landing practice for aircraft carrier pilots, parachute training and live-fire artillery practice.

First, night landing practice. Let me begin by saying that landing an airplane on an aircraft carrier in the dark is a difficult, dangerous job. And because of that, practice is mandatory before an aircraft carrier gets underway from port.

To deal with the noise nuisance, we moved most night landing practice from the Kanto Plain to Iwo Jima in 1991. Occasionally, for urgent operational reasons, night landing practice is conducted at other locations. Such cases, however, are few.

Iwo Jima was an interim solution, with the agreed expectation that the Japanese Government would find a permanent site within 100 nautical miles of Atsugi Naval Air Station. Today, however, the vast majority of carrier night landing practice is still conducted at Iwo Jima - despite drawbacks: It is dangerous because it has a single runway, with no alternative airfield for use in an emergency or bad weather. It also keeps our aircrews and support personnel away from their families for weeks at a time. Despite these circumstances, we continue to use Iwo Jima in order to minimize the impact of night landing practice on Japanese citizens.

Parachute training has also been in the news recently. As you can imagine, personnel whose missions - and lives - depend on this skill must practice regularly. To minimize the inconvenience to local residents, U.S. commanders discontinued parachute training at Yomitan on Okinawa, and agreed to relocate it by the year 2001 permanently to an island named Ie Jima. Our forces have already begun to use Ie Jima, but, unfortunately, bad weather conditions, high seas, and limited support facilities there often force cancellation of jumps. As a result, troops occasionally must use other locations in order to keep proficient.

Finally, you may also have heard about how our Marines on Okinawa moved artillery training to Japanese Ground Self Defense Force ranges on the main islands. What you may not have heard is that this has been a success. Local residents tell us they are impressed by the Marines' conduct during these deployments. Typically, in addition to training, the Marines do community projects such as painting and repairs at senior citizen homes, hospitals, and orphanages.

These are some of the steps our service members have taken to ensure that they can perform required training with the least intrusion on surrounding communities.

Our alliance is based on a wide range of common interests, not common enemies, which transcend the end of the Cold War. Unfortunately, the end of the Cold War did not mean the end of instability in the world. For the foreseeable future, stability in the Asia-Pacific region will be based on the security relationship between the United States and Japan, and the forward deployment of U.S. forces in Asia. I am confident our two governments and our two peoples will sustain the defense cooperation which has done so much to maintain the peace and security of this part of the world for the past half-century.

Last year was marked by extraordinary cooperation between the United States and Japan. To be sure, at times, there were differences between us on some issues. But overall, we can point to a solid record of achievement in addressing matters of common concern. And as we look ahead to Prime Minister Obuchi's visit to Washington in May, I am confident we will continue to build on this record of cooperation.

Thank you.

(begin transcript)

Question-and-Answer Session

Q: Mr. Ambassador, could you give us your views on three areas which you did not touch directly? That is, what do you - how do you assess the Japanese degree of cooperation with the U.S. in the areas of the NATO intervention in Yugoslavia? In the case of the Mid-East, that is [the] Israel and Palestine situation? Or in the case of the complex relationship with North Korea? Thank you.

FOLEY: I think the Japanese cooperation is excellent in all three areas. In the case of the NATO operations in Yugoslavia, the Japanese government issued a statement placing the blame for the present circumstance squarely with President Milosevic and with his failure to agree to the Rambouillet Accords, and called upon him to - called upon the Federal Republic of Yugoslavia to agree to the Rambouillet Accords. It also expressed the government's understanding of the necessity of using NATO air strikes in order to limit the emerging humanitarian crisis in Kosovo. And the statement of the Japanese government was deeply appreciated by the United States.In the case of the Middle East, Japan has been cooperative in supporting the peace process in the Middle East, has provided financial resources, diplomatic support, as well.

And finally, Japan has undertaken in many parts of the world to give solid support to democratic processes and peaceful efforts and it shares, obviously, a deep concern, as we do, about the conditions on the Korean peninsula. We are coordinating very closely with the Japanese government on the mission Dr. Perry has undertaken to review United States policy toward North Korea. Dr. Perry visited Japan on March the 9th, had extensive consultations with Japanese ministerial leaders, including the Prime Minister, and fully sought and received the consultation, advice and views of the Japanese government, and the process is not yet over.

So in all of those areas we value very highly the Japanese cooperation.

Q: Mr. Ambassador, what do you see as the likely impact on U.S.-Japan relations if Ishihara Shintaro is elected governor of Tokyo? Of course, he will be governor of Tokyo, not Prime Minister, but various political analysts have suggested that he could considerably influence the climate of opinion on matters, for instance, such as the Yokota Air Base. So what are your - what is your analysis of the likely outcome --

FOLEY: It's actually an easy question to answer, sir. The United States government does not comment on Japanese political elections before, during or after those elections.

Q: Mr. Ambassador, U.S. soldiers, unlike in Europe, are largely segregated in Japan. They don't have any opportunity to socially mix with the local people, unlike they have the same - I mean, they have in Europe or in England. What are you doing, or what [is] the Japanese government doing to create opportunities so that the U.S. soldiers who are here to defend the Japanese can have some minimum social opportunities to mix with the Japanese people?

FOLEY: Well, if I may slightly disagree with the question, I think American forces do have an opportunity not only to enjoy the various social and cultural and other possibilities of being stationed in Japan, but there are some very generous and warm responses that Japanese families have shown toward U.S. forces, inviting them into their homes and assisting and seeing that they have a meaningful experience in Japan.

It is, however, a fact based on history, that most of our forces are located -- three-quarters of them, actually - in eight-tenths of one percent of the Japanese territorial area in Okinawa. And that does present an unusual situation and we have, accordingly, tried in every way that we can to lessen the impact, the irritation, of that overwhelming presence in Okinawa, through the SACO Agreement, by reducing the number of the bases there. And we look for every opportunity to have constructive and other useful experiences with our forces and the population on Okinawa. But by its very nature, the circumstance of so many of our forces being located in such a very restricted area of Japan has been a problem.

Q: I'm a bit confused by some Japanese press reports today, and perhaps you can clarify what you've said. The Yomiuri Shimbun is reporting that you would like to see all American prisoners in Japan shipped back to prisons in the United States, and for Japanese prisoners in the United States to be in Japan. Is that an accurate reflection of what you've commented on that subject?

FOLEY: Well, it's a little harshly put, but I'll tell you what's happening. The United States and Japan are considering a program of transferring prisoners held in the United States who have Japanese nationality to Japan to serve their sentences here, and transferring American prisoners imprisoned in Japanese prisons to the United States to serve their sentences in American prisons. This is not a new thing.

Through the Council of Europe Convention, the United States has many such arrangements with foreign countries. It makes sense. People who have grown up and matured in one culture very often are somewhat difficult prisoners for rehabilitation, and language problems and other things, when they're incarcerated in a foreign country. And so these transfer programs have worked out very well with many different countries, chiefly, as I say, through a wide-spread agreement or convention under the Council of Europe.

I don't know whether we will have exactly that relationship with Japan, but we hope that either through that mechanism or a bilateral agreement of various kinds, it will be possible to affect such a transfer in the not-too-distant future. And we hope that the negotiations might progress far enough to have some announcement be possible at the time the Prime Minister visits Washington. It's a very good program, actually.

Q: On a matter entirely distinct from the Ishihara election issue, do you have any apprehension that the anti-base sentiment that was seen in Okinawa may, in fact, spread to the Tokyo area? And, secondly, in terms of the Senkaku Islands, do you believe the security treaty does oblige the U.S. to come to the defense of the Senkaku Islands if they were to come under attack?

FOLEY: Well, I think we've gone over this ground in the last question a number of times, and we hope that this dispute will be resolved peacefully. We have no reason to believe that it will not.

On the question of concern about bases, I think if we look at what I understand of opinion surveys in Japan, there is an overwhelming support for the security relationship, something approaching consensus figures in the high 70-percentile areas. It is true, I think, at the same time, that most Japanese would prefer there to be a smaller footprint of U.S. presence in Japan - military presence in Japan. That opinion is not limited to Okinawa. It exists throughout the Japanese community. But it doesn't detract from the fact that the overwhelming number of Japanese believe that the security treaty is an important part of the U.S.-Japan relationship, and that they believe that it serves the interest of Japan in providing defense for Japan and stability for the region.

We shouldn't be, I think, surprised that there are some concerns about base presence. That's almost inevitable in any country. But we're working very hard to ensure that our bases interact with surrounding Japanese communities in the most benign and non-irritating way, and the base commanders are all very sensitive to this. The military commands, as a whole. And anything that we can do to carry on that effort we will do.

We are pretty much on track, by the way, with the SACO Agreement of December, 1996. One of the areas, of course, is the movement of the Futenma Air Station, which still awaits selection of an adequate operational replacement, that has not yet been identified, in the sense of having a final conclusion.

Q: Ambassador, you are the second American envoy to duck this question on Senkakus. Let me put - ask you very clearly. In your view, as the Japanese contend, do the Senkakus belong to Japan? If they do, aren't you obliged by the treaty terms to defend it? And, if I may just ask you a question which will not exactly set off a Pacific war, in his communications with the Chinese, does your counterpart in Beijing refer to the Senkakus by the name "Senkaku"? Thank you.

FOLEY: I have absolutely no idea how my counterpart in Beijing describes these islands. They have a Chinese preferred name, as well as a Japanese preferred name, as you know. We do not believe - and I'm going to say it once again - that these islands will be the subject of any military conflict, and so consequently, we do not assume that there will be any reason to engage the security treaty in any immediate sense. If that's ducking the question, so be it.

Q: Does the U.S. take a position on who the Senkakus belong to?

FOLEY: The United States notes the Japanese claim to these islands, and we are not, as far as I understand, taking a specific position in the dispute. But we do, in some specific cases, clearly identify where we believe Japanese sovereignty applies, including the northern territorial islands. We do not make any hesitation about that at all.

Q: Thank you. American voters at home, watching the war in Kosovo are, of course, now again very sensitized to the question of casualties and our soldiers doing battle overseas. And I think many of them would be surprised that if there was a military contingency even tomorrow in the areas surrounding Japan, there'd be significant real limitations on the ability of U.S. forces to operate within Japan and the ability to cooperate between the U.S. and Japan forces, pending passage of the guidelines. In that context, are you disappointed by the slow pace with which the Diet is tackling that issue? And would, in fact, the election of Ishihara Shintaro in Tokyo complicate the process?

FOLEY: Let me just make this clear so we don't dance around it. I'm not going to comment on anything to do with any of the candidates for the governor of Tokyo. Directly. Indirectly. Through the front door. Through the back door. Through the side door. So you can tax your ingenuity as you will, but I'm not going into that subject.

As far as the guidelines are concerned, we are not disappointed with the pace of consideration of the guidelines. I'm a former member of the House of Representatives of the United States and a former Speaker and Majority Leader, and I'm the first to understand and appreciate in a parliamentary democracy the need - indeed the requirement - to carefully consider matters of importance to the country. And this is proceeding very - as far as I can tell from my vantage point - very responsibly and carefully and properly in the Diet. We expect and hope to see the conclusion of the debate in this session of the Diet, and we'll be very, I'm sure, I'm confident, satisfied with the result of those Diet deliberations. But they have, of course, every right to take place carefully, as they are.

Q: Mr. Ambassador, over the past year, Treasury Secretary - no - Deputy Treasury Secretary has said the United States has given windows of opportunity for Japan to recover its economy. Has in your opinion, Japan fully taken advantage of those windows of opportunity?

FOLEY: Well, I think, as I said in my formal remarks, we value highly the steps that Japan has taken using fiscal measures to, among primarily, to stimulate the Japanese economy, and it's been a very considerable program. There's no doubt about that at all. And the entire Japanese budget policy with respect to the economy has been rather dramatically altered in the last year and two or three months, from raising the consumption tax in May of 1996 - I'm sorry, 97 - to beginning a process of tax reduction and a large-scale public works stimulation in 1998. And continuing into this year, very substantial use of public money in recapitalizing the banks. I don't know if anybody's added up all the resources that the Japanese government has assigned to restoring its economy, but I would guess that it is in the nature or in the area of a hundred trillion yen. And that is an enormous undertaking.

What is frustrating, I suppose, for everyone is that these vigorous efforts have not yet produced what we hoped would be a growth in the Japanese economy yet. It will, I'm sure, come. I mean, there is no question in my mind that the Japanese economy is going to recover. All of the conditions that made Japan the second largest economy in the world and the miracle of the second half of the 20th century, are still present. A highly educated society. A highly developed technology. A world class manufacturing system. Indeed, I had a CEO tell me last night that the standard, the manufacturing standard of excellence in the world, still is Japan. So those capacities, those abilities, are still present in this society, and they're going to produce their inevitable return to growth.

I must tell you that there is one thing that worries me. I hear, from time to time, that some Japanese feel that the United States, rather than wanting a strong Japanese economy, somehow wants a weak Japanese economy. There are some sectors of Japanese opinion that seem to think that the United States finds some possible benefit in the continuation of a weakened Japanese economy. Nothing - nothing - could be further from the truth.

And it's not just because Japan is an ally and a friend and a partner. It is, frankly, out of deep sense - a deep sense - of self-interest, as well. The United States benefits enormously from a strong Japanese economy. It does not benefit from a weak Japanese economy. Much of our trade imbalance today, for example, is not the result of increased Japanese exports to the United States. It is a result of reduced Japanese imports from the United States. Because its economy is weak.

And so if I have a message, a gospel, that I'd like to preach on the street corners of Japan, it is that we want Japan to have an economically strong and resurging economy. That is in our interests and in Japan's interests and in the interest, of course, of Asia and the world. So I am constantly worried that somehow the message is not quite convincing to some Japanese.

Why is this? It may be that some Japanese see stories about U.S. investment in Japan, particularly with Japanese companies that otherwise might be moving toward bankruptcy, as a kind of special advantage to the United States. Actually, we view it the other way around: that the United States and other foreign investment in Japan is an asset to Japan's recovery. And I was given some interesting statistics the other day that I'll share with you. Between 1990 and 1997, there were an average of about 600 merger and acquisitions in Japan each year. In 1998, the figure went to 950, a jump of 38%, and it's expected to go well over 1,000 this year - 1,000 merger and acquisitions. Many of these are foreign mergers and acquisitions in Japan. That's impressive, and it's a move we believe very much in the right direction.

But before it is over read, the United - the U.K., the United Kingdom - has an economy 30% of the size of Japan, and last year had something like 1,250 mergers and acquisitions. And those had 50 times the value of the mergers and acquisitions in Japan. The United States had over 11,000 mergers and acquisitions with a value of 555 times those of Japan. Japan still remains the country with the lowest direct inward investment of any country in the OECD. And I hope we'll see a change in that, because it's not a threat to Japan's economy. It is a strong asset for Japan's recovery and its future economy.

Q: Mr. Ambassador, a moment ago you said the United States "notes" Japan's claim to these islands, referring to the Senkakus. There are a number of factors in that claim, but the main one, or at least the most recent one, is the fact that the United States controlled those islands as part of Okinawa when it administered that area, and handed them back to Japan - not leaving them as an international undefined territory.

FOLEY: That's true.

Q: Why is it that the United States only "notes" a claim that the United States insisted was theirs --

FOLEY: It's very true that we turned them back to Japanese administration in 1972. And, as such, they are part of Japanese-administered territory. No question about that.

Q: I was wondering if the United States is in consultations with Tokyo over Japan possibly accepting any refugees from Kosovo? And if so, what are the contents of those consultations?

FOLEY: To my knowledge, Japan has not been asked to accept any refugees. We do appreciate the fact that Japan has pledged more than 15 - almost $15 million, plus 1,000 tents, to help in refugee relief. By the way, the U.S. agreement to take 20,000 refugees is not an agreement to take them in anything like a permanent resident situation. They are temporarily being housed for return to Kosovo. So these are not refugees who are being admitted to the United States for some future residence.

Q: You mentioned the need for job creation. Some people have been talking about the need for another supplementary budget this year. Do you think the Japanese government needs to put up more money in order to reflate the economy? And if I can ask a second question, the U.S. and Japan have taken different approaches to China's human rights track record. Would you like to see Japan take a more hard-line stance and support the U.S. approach?

FOLEY: Well, on the first part of the question, the budget is a matter for Japan to determine. We have expressed a hope that they will continue to maintain a momentum of efforts to use all appropriate fiscal and other means to continue movement toward recovery, and until recovery occurs, but we do not get into specific suggestions to Japan on how it should implement those efforts.

The second part of the question was whether we should expect Japan to do more in the human rights side. I think we're appreciative of Japan's support for human rights. It's one of the things we have as a shared value, and, again, the question of how that is implemented is a matter for Japan, but we appreciate Japan's general support for human rights issues.

Q: Mr. Ambassador, you referred several times to the situation with the bases in Okinawa, where they are particularly concentrated. In this context, there's always been a discussion but it was seldomly officially, shall we way, dealt with in public, that maybe some of the marines stationed in Okinawa could be relocated to Hawaii without too much of a strategic disadvantage. But whenever I ask this question of American officials they refuse to even discuss the issue and say that's completely out of the question, et cetera. What I would like to know is whether, for instance, if Japan is willing to cover the cost of such an exercise, if it would be possible, for instance, even to reduce it by 5,000, the marines, even by 5,000 people. That would probably relieve a lot of the tension in the - in some parts of the Okinawa area. In terms of some contingency in Korea, whether it's 25 or 20,000 shouldn't make all that difference. It wouldn't be sufficient, anyway, so it's just a time lag question for getting the extra 5,000 transported from Hawaii, and I know the Hawaiian governor would welcome them. He has said so publicly, and, of course, the previous Okinawan government has also endorsed that view.

FOLEY: We have no plans to relocate any portion of the U.S. marine contingent in Okinawa in the foreseeable future. A review of our force levels in Asia was completed not very many months ago and I think the general conclusion was that it is considered appropriate to the security requirements at this time. So I can't give you any hint or satisfaction in the suggestion that any portion would be moved. I don't think they will be. We don't have any plans to do that. And I expect the Marine contingent to remain at the present force.

That doesn't change the fact that we want to make the most strenuous efforts to reduce any pressures that might occur in Okinawa. And part of that was the decision to return areas of Okinawa that were occupied or used by U.S. Forces to Japan. That process is continuing. I think we've completed about 13 of the 27 identified goals of the SACO Agreement, and we are anticipating the possibility that some will be returned ahead of schedule.

Q: Mr. Ambassador, could you give me some comments on U.S.-Japan relations from the metals angle so it will pay for my lunch?

FOLEY: How much did your lunch cost? [laughter]

Q: On a more serious note, Mr. Ambassador, as you know, harsh words have been flying back and forth across the Pacific in recent months over the steel importation. In fact, your House of Representatives passed a bill to restrict steel imports into the United States, which Japanese see as a clear violation of the WTO rules. Now, in your view, what would be the best solution to this issue?

FOLEY: Well, the question of the House of Representatives passing legislation, it's true, they have passed legislation, but it's not been passed by the Senate, it has not been signed by the President, and as much as I admire House actions, generally, they cannot constitute WTO violations in themselves because they don't have the force of law. I would note, and I hope you will note, that the administration opposes this legislation, this quota legislation, that was introduced and passed in the House. I believe that the reduction in steel imports back to pre-crisis levels of 1997 is being accomplished and month by month I think we're noting a movement in that direction, and I think that's a positive and constructive way to approach this problem.

Q: Mr. Ambassador, I'd like to explore the issue of deregulation, which in your formal remarks you supported strongly. Taking one example, one sector, commercial aviation, the effect of deregulation in the United States is that published fares from Detroit to Philadelphia, a route that I fly frequently, have now run in size $900. I recently flew to Fukuoka for about half that amount. American businesses, regional business is claiming that these high fares in the States are strangling them. Would you comment on this apparent inconsistency with the theory that deregulation is good? And might not the same thing happen in Japan - excessive tariffs, if we follow - if Japan follows the American model?

FOLEY: Well, I think that the reason we think deregulation is good is that we believe that competition will improve service and lower costs. Now in some markets, there are perhaps less than ideal competition circumstances. That's what I also mentioned in my remarks, that any competition trends have to be watched carefully when deregulation occurs.

But overall, I mean, you can probably find some problem in every government policy or undertaking. But overall, we believe that the experience of the United States in deregulating transportation, both airlines and trucking, and deregulating telecommunications - the first two happened because of legislative changes, the second came through court actions - had a remarkably positive, constructive benefit to workers, industries and consumers. And overall, airfares have fallen in the United States during a time when, in some cases, there were actual increases in fuel costs (not now, but at some immediate period after the deregulation was brought into effect.)

Also, the whole information industry of the United States with all of its myriad opportunities, investments and employment, could not have taken place without the deregulation of the telecommunications industry in the United States. And I'm a neophyte on the Internet, so I'm not a computer whiz, but I just simply note that it's not surprising that Internet use is so much more extensive in the United States than it is in Japan. Part of the reason is the costs. There are flat rates here, as I understand it, between 11:00 and 5:00 in the morning, but otherwise you pay very high rates for Internet connections. And in the United States, the prospect of where this business is going to go is mind-boggling. And Japan is a technologically advanced society of the first rank. It would be a strange circumstance if it's not in the forefront of e-commerce, for example. But because of, I think - I shouldn't say unsatisfactory - because of very slow deregulation in the telecommunications industry, this is being delayed.

Q: There have been some reports in the Japanese press criticizing the United States military for delaying information about the North Korean missile launch last year, and also about the intruding ships last month. I wonder if you could comment on this issue, and perhaps related, whether you could share your comments on Japan's plans to build its own satellite intelligence system?

FOLEY: Well, first of all, with relation to the Taepodong missile, it is not true that the United States delayed information to Japan regarding it. As a matter of fact, it was a splendid example of U.S.-Japan cooperation. All the basic data that was achieved was the product of a Japanese AEGIS cruiser. And the United States assisted in the analysis of that information. But it was a very, very clear and dramatic case of effective cooperation between the two countries.

Secondly, with relation to the intrusion of the two North Korean disguised fishing vessels, they were discovered by Japan and the United States participated, through Seventh Fleet aircraft, in their surveillance. But all other decisions, of course, and actions, were taken by the Maritime Safety Agency and by the Maritime Self-Defense Forces.

And I might just tell you a little anecdote. Some criticism, I think, has been occasionally said on the street by Japanese and others that they fired 1,200 rounds and didn't hit the fishing boats. That piqued my Naval Attache and Defense Attache, because as a naval officer, he thought that the Japanese Maritime Self-Defense Forces had conducted an extremely professional operation in every respect. They were charged not to hit the vessels, but to fire warning shots, and they did it with great professional skill, in his judgement. And he, I think, resented as a naval officer that the sister service of the Maritime Self-Defense Forces didn't get appropriate credit for a job very well done, under the orders that they were given.

But I just simply say that we cooperate very closely and there is absolutely no truth to the suggestions that we have withheld information. In fact, quite the contrary, we have cooperated with Japan on developing the information.

On satellites, that's a question, a matter for Japan to decide entirely and all indications are that Japan intends to go forward with their own intelligence reconnaissance satellite. The United States will cooperate by continuing our sharing of information and doing whatever we can to assist with whatever decision is made by the Japanese government.

Q: On that ship incident, there's a question about when the Self Defense Forces became involved, they were under legal restraint not to shoot unless they had been shot at, but the coast guard could have fired if they wanted to, if their order to stop had not been followed. Do you see a problem in that area, that a decision was made to move it over to the defense forces or do you think it was just a matter of the coast guard just couldn't keep up with the ships?

FOLEY: These ships are very fast ships. They increased their speed, I was told, from 10 knots to 24 knots to over 30 knots in very rapid order. That is an extraordinary speed to maintain for a vessel of that size. I think there was a problem the MSA had, of simply catching these vessels because of their fast speed and that was one of the reasons, I was told, that the Maritime Self Defense Forces were engaged.

(end transcript)