Ambassador Howard H. Baker's Speech at the Japan Center For Economic Research
Hotel New Otani
September 19, 2002
Tokyo, Japan
Good morning. Mr. Chairman and gentlemen, I thank you for inviting me to speak this morning. I appreciate your coming out and giving me this chance to participate in your program, to make these remarks, and then to try to answer your questions. And perhaps you can answer some of my questions. But in any event, I must say that in the preliminaries to the breakfast I had a chance to meet with some of our friends, and I have declared that we have covered all the questions. There's no need to ask any more questions. We've answered them all.
My friends, it was my privilege to travel to the United States last week to be with President Bush and Prime Minister Koizumi in New York in advance of the President's speech to the United Nations, and, of course, in advance of the time when Prime Minister Koizumi made his historic visit to North Korea. It also coincided with the commemorative ceremonies in New York for the terrible events that occurred on September 11. My I take just a moment on behalf of the American government and the American people to offer my thanks to the people of Japan for the sympathy and support that they showed to us in the wake of September 11. It was truly remarkable, and it was most impressive.
I think there has been no recent example of the proof of the friendship of our two countries than the way Japan reacted to the terrible tragedies in New York, Washington and Pennsylvania on September 11 of last year. Indeed, nothing has impressed me more during my time as United States Ambassador than the genuine and heartfelt expression of sympathy from the Japanese people, who so clearly experienced the same sense of shock, of outrage, and indignity that we suffered in America. I would like also to offer my gratitude to the Japanese people for standing in solidarity with the people of the United States as we began dealing with that tragedy.
In the days following the attack, thousands of Japanese citizens visited the Embassy of the United States to show that support. They left floral tributes. They left flowers in great abundance, unsolicited, uninvited, at the gates of the U.S. Embassy. There was a mountain of floral tribute there over the course of many days. We were greatly impressed and touched. The thought occurred then, what do we do in recognition of this outpouring of sympathy and support? How do we acknowledge these tributes by the people of Japan? What we chose to do at the American Embassy was to plant a tree in commemoration of September 11, and in appreciation for the support and sympathy of the people of Japan. We gathered up the floral tributes-the flowers-and in a traditional way we had them incinerated and reduced to ashes. Then those ashes were used in connection with the planting of that memorial tree, thus, in my view, adding to the significance of occasion, and the importance of the symbol.
My friends, we live in dangerous and difficult times. We are allies, but as I say, we are friends as well. We share each other's grief, whether for September 11 or for the fate of Japanese abductees in Korea. We watch with great interest as we are briefed on the results of Prime Minister Koizumi's historic trip to North Korea. We watch with great anticipation the unfolding of the future of the relationship between Japan and North Korea, and then, of course, between North Korea and the rest of the world. You have a very special opportunity in Japan, and I believe a very special responsibility to help lead the world in defining what that relationship should be. You are close by. You are in the neighborhood, so to speak. You know more about North Korea than we in America. You understand the region better than, perhaps, we ever will. So you have a special leadership role in defining these new relationships, and we in America look forward to the wisdom and judgment that you'll exercise as that unfolds and develops.
My friends, the response of the Japanese nation was more than just an expression of sympathy. It was also very real, for you responded quickly and decisively to join us in the war against terrorism. Indeed, within days of the attack, Prime Minister Koizumi pledged "maximum support" for the United States and its war against terrorism. Throughout the past year, the Japanese government has carried through on this firm commitment by working together with the United States and other like-minded nations to tackle the unprecedented challenge that is before us. The Japanese Self-Defense Force has offered rear-area support, and perhaps the most visible contribution has been the participation of your Maritime Self-Defense Forces as they steamed away from this nation in support of our efforts to fight terrorism-but fully within the confines and restrictions of your Constitution.
In addition, Japan has quickly moved in other areas. You have helped block terrorist fundingc you have increased vigilance at harbors and airportsc and, of course, offered to rebuild a devastated country-Afghanistan. Prime Minister Koizumi reiterated his sympathy and support at the recent summit. As President Bush said last October, the United States has no greater friend in the war on terror than Prime Minister Koizumi.
In the wake of the September 11th attack, there were dire predictions for the international and the U.S. economies. But both economies, my friends-yours and ours-proved resilient indeed. The U.S. economy recovered from the immediate shock to grow 2.7% in the fourth quarter of 2001 and 3.1% in the first half of this year.
Yet we know that the recovery is fragile. Stock market losses and high profile corporate accounting scandals have again given rise to doubts about the direction of the U.S. economy, but we believe that our economic fundamentals remain strong, and the recovery appears to be well on the right track. The United States Government has moved rapidly to forestall a further slowdown. President Bush has instituted growth-oriented tax cuts, and remains committed to spending restraint. Our Federal Reserve Board aggressively cut its target federal funds rate eleven times in 2001, and is holding down interest rates in our country. Given the lags in the effects of monetary policy measures, these reductions should continue to provide stimulus well into the next calendar year, encouraging growth in personal consumption expenditures and residential investment.
Robust growth in the pace of business investment provides the key to a
sustained recovery. Thanks in part to the Bush Administration's removal of
disincentives, business investment in our country has already shown signs of
firming and growing.
The U.S. Government has moved swiftly to restore confidence in American
companies and in their governance. The President outlined a ten-point plan to
improve corporate responsibility and provide incentives for prompt, clear
disclosure of relevant economic information. Congress and the Securities and
Exchange Commission have both taken steps to restore investor confidence and
improve business accountability in the United States.
I expect it will take some time for these measures to fully restore confidence, but the speed with which they were undertaken is already boosting our economy. More importantly, these scandals show that corporate governance reform requires a continuing and sustained effort. The government and corporations must remain vigilant to prevent or repair-forthrightly and fast-any corporate misbehavior, be it falsified books, unusual stock transactions, or mislabeled products.
It is our ambition in America to be not only the most vibrant economy, but also to have the most responsible, transparent, and effective corporate governance in the entire world.
One trend that we have seen in the United States, but also here in Japan, is a movement of capital into less risky assets, such as government bonds. Unless we focus more on innovation and risk taking to create new business opportunities in sections with high growth potential, we risk stifling those sectors that will sustain growth. Many of the U.S. measures I have already mentioned-including tax cuts, investment incentives, and market confidence boosting measures-will in our judgment promote entrepreneurial activity and risk-taking.
While these measures are not an exact prescription for Japan, they have worked well in the United States. They offer great promise for an improved climate, enhanced activity in our corporate and economic sector, and we respectfully suggest that they have relevance to the situation here in Japan as well.
I believe that the Prime Minister remains committed to reforms that will turn around the Japanese economy. The Japanese Government, as Prime Minister Koizumi has himself said, should emphasize financial problems such as non-performing loans, as well as ending deflation and accelerating structural reforms. Tax reforms specifically focused on permanent, significant cuts in tax rates would increase incentives for investment and for risk-taking. The resolution of the loan problems would free up unproductive capital, labor, and land for areas with greater growth potential. Structural reforms to lower costs would increase Japan's global competitiveness. Improved corporate governance would attract increased investment in financial markets, providing Japanese firms with more financing options. My friends, I remain confident that the Japanese economy will retain enormous potential provided that the government and people of Japan push ahead with their ambitious program of reforms.
As both our countries implement reforms to boost economic growth, we must work together to help our partners. Trade liberalization and facilitation boosts growth. I believe the United States and Japan, as the world's two largest economies, must move forward in trade liberalization efforts. President Bush has recently obtained authority, the Trade Promotion Authority Act, to negotiate and conclude global trade talks and free trade agreements, which signals the United States' commitment to expanding world trade. We look forward to working with Japan to promote regional and global trade liberalization.
My friends, I do thank you for the opportunity to be here. There are many issues that confront our two nations. The greatest guarantee of the success of our efforts to lead the world in peace and prosperity may be centered on the cooperation and friendship between America and Japan. My predecessor, Ambassador and Senator Mike Mansfield, was found of saying, and saying often, that the bilateral relationship between Japan and the United States is the most important bilateral relationship-bar none. Mike was right in his time and what he said is right today. So we have an obligation, my friends, to understand each other, to work together, and to cooperate in this business of providing security and peace and mutual prosperity.
Thank you very much.