U.S.-Japan Relations: The Outlook for 2005

Remarks by Charge d'Affaires ad interim
Michael W. Michalak
America Japan Society - International House of Japan Forum (AJS-IHJ Forum)

Tokyo, February 18, 2005

Ogata-san, thank you so much, and good evening everyone. It's a real pleasure to be here tonight with so many people whom I know. Tomura-san from the Okura Hotel and I go back more years than either of us wants to remember. And, feeling the interest here in U.S.-Japan relations is very, very gratifying to me. It's just a real pleasure. I did want to say a special thanks to the people at the Okura. Yesterday was Ambassador Baker's last day in Japan. We left the residence at about 9:20 in the morning and as we pulled out of the Ambassador's residence, there was a good portion of the Okura staff on the corner there - right by the corner there to wave goodbye to the Ambassador. He really, really appreciated that. Thank you, thank you very much.

And it's also a pleasure of course to be here with the American-Japan Society because I've just become a board member - as I say that's why I work for Ogata-san and Kuno-san. I'm delighted to be able to be a part of that and to be able in the American-Japan society to promote U.S-Japan relations. As you know, Ambassador Baker has often said that not only are we allies, but we are also friends. And I truly feel that way here this evening.

And, I-House, as you all know, has got a special place in all of our hearts; it has been here for so many years and has been a wonderful supporter and promoter of international relations, and particularly U.S.-Japan relations. I've been here many times for events - both as speaker and as participant and as just listener and have been delighted with the caliber of the people and the building itself. And, as we've just heard, we're going to have some renovations here and I hope that the building will be closed for a relatively short time, so that we can get back to these wonderful, wonderful programs. So, I urge each and every one of you to go back to your companies and say I want my name on that plaque. Big donations! And I must also say, before I actually get into this speech here - congratulations to my friend from Toyota, because I was just down in Nagoya to look at the Aichi Expo. And I've got to say that's going to be a wonderful, wonderful exhibit. I saw the American Pavilion, which is about three-quarters finished, and it looks beautiful. There's going to be some very high tech displays there - in fact, throughout the Aichi Expo, everything is high tech. And I think it's just a wonderful, wonderful opportunity for Japan, after 10 lost years, to say Japan is back - everybody come look and see. So, I urge you all, if you have a chance to get down to see this. It's just a beautiful exhibit.

But today of course is a watershed day - well, I don't know about watershed. But, today is the first full day of the post Howard Baker era in Japan. Ambassador Baker is just a tremendous man and I just have the highest respect and admiration for him. He, too, has not only been an excellent boss but he's been a good friend to me and a good mentor and taught me a lot. And, he always used to say, as you know that the U.S.-Japan relationship has never been stronger, but it's a high maintenance relationship. And he used to also say that he tried three times to retire and failed each time. Well, this time, I think he's going to do it.

On thinking back on the years, he came here - his first day - I'll never forget that first day - when his airplane landed and a few of us from the Embassy were there, and we were all worried because this was just after a very unfortunate incident down in Okinawa. And Ambassador Baker had just been flying for 14 hours, knew very little about Japan and he had to come off the airplane and face all of these cameras. But he handled it with dignity and grace and went on to become, I think, the finest Ambassador that we've ever had here in Japan. And I can say that because I have served with Ambassador Mike Mansfield as well and up until I served with Howard Baker, Mansfield was the best Ambassador Japan ever had, but now, I'm sure it's Howard Baker.

And, you're going to get another really good Ambassador in Thomas Schieffer. I went to Australia last week to meet Ambassador Schieffer, and I found him to be a man who deeply, deeply cares about Japan. He knows from his close relationship with President Bush how much President Bush admires and likes Prime Minister Koizumi. And he knows from his work, not only with the President but also his work down in Australia, that the U.S.-Japan relationship is the most important relationship in this part of the world. So, he is preparing himself now, and I'm sure that by the time he gets to Japan, and I anticipate that will be end of March, or beginning of April sometime, that he is going to be fully ready to integrate himself into the Japanese government and society and you will find him every bit as "omono" as Ambassador Baker.

In the vein of looking ahead, I have been asked to share with you my thoughts on "the outlook for 2005" in our bilateral relations. Well, actually rather than say what I look for in 2005, I think that I'd rather refer to a book that was done by Bungei Shunju entitled The Issues for Japan 2005 - Nihon no Ronten, ni sen go. The editors identified issues of greatest concern to the Japanese people and the top five issues were as follows:

First, how should the threat of terrorism be addressed?

Second, how should relations with a rising China be managed, and how can we ensure peace and stability in Asia?

Third, where should the U.S.-Japan alliance be heading and what local changes will U.S. force transformation bring?

Fourth, is the Japanese economic recovery real and is the health of the financial sector now assured?

Fifth, how should trade liberalization and Free Trade Agreements be pursued so as to address Japanese domestic problems?

What struck me about this book is that every single issue of concern is one in which the Japanese people and the Americans are already working close together - very close together. So let me review each one of these five areas and outline some of the progress that I think we might be able to make in the coming year.

First, Americans, like Japanese, put the threat of terrorism at the top of their list of concerns. President Bush and the American people deeply appreciate the support Japan has demonstrated in the war against terror, particularly in Iraq and Afghanistan. Early on, Prime Minister Koizumi and his Cabinet made the bold decision to dispatch Maritime Self-Defense Forces to the Indian Ocean, and moreover, Japan hosted a conference on Afghan reconstruction in 2002, and co-chaired the International Conference on Reconstruction Assistance to Afghanistan in Berlin in March last year. I was here on 9/11 and saw the outpouring of support from the people of Japan, and believe me, it was deeply appreciated - not only by the people of the United States, but even more so by those of us who were here and saw the hundreds and hundreds of flowers and the lines of well-wishers who lined up at our Embassy. We really, really appreciated that and will always keep that in our hearts.

We've seen concrete signs of progress from our joint efforts in Iraq. I'm sure you share my admiration of the Iraqi people for their brave commitment to democracy and an open society that they displayed on January 30. For me, the sights of long lines of Iraqi men and women waiting to cast their ballots - even though they knew that there were threats of violence and terrorism - was a remarkable testimony to the common human yearning for freedom. Japan can take pride in this, too. Your government took the courageous step of sending troops to Iraq to help rebuild a country that had suffered from decades of dictatorial rule. It was a difficult decision, and remains a difficult decision but I believe that history will judge that that decision was the right one. I think that in 2005 we are going to see the situation in Iraq continue to improve as the Iraqi people continue to claim for themselves the inalienable right of self-government.

We welcome Japan's growing willingness to accept its responsibilities as a world power and in this regard, I should stress that the U.S. supports Japan's bid for a permanent seat on the U.N. Security Council. I believe that this will allow Japan to expand the leadership that it is already exercising on the global stage. Over the next few months I hope that we will see progress on the various proposals on U.N. reform and we will try to bring these things to fruition sometime during the coming year.

The second area of concern to Japan involves the appropriate response to an emerging China. Some look at China's rise with alarm and see it as a power that we must fear. Others are convinced that China presents no threat, but rather an economic opportunity. I think, and I'm sure most people would agree, the truth lies somewhere in between. We must remain watchful, there are areas of concern in China's rise, but we must also remain aware of the great possibilities that we have to work constructively with China. China can go in either direction - a positive direction or a negative direction. And I think it's up to us to work with China to ensure that she develops in a positive way.

China is a key partner in our continuing efforts to ensure peace and stability on the Korean Peninsula through the six-party talks. We believe that these talks are still the best way forward to try to denuclearize the Korean Peninsula. Japan and the United States will continue to be united in our commitment to resolve these difficult issues by diplomatic means. And, at the same time, the United States will continue to support the government of Japan in its ongoing quest to seek a full accounting from the North Koreans of the Japanese citizens who have been abducted.

Going on to the next item on the list, the third area of focus for the Japanese people in 2005 involves the future of the U.S.-Japan alliance. First, it is important to note that the United States is currently engaged in a worldwide military transformation. We are modernizing our global force structure to allow us to respond to the new threats to our common security. In the case of the U.S-Japan alliance, President Bush and Prime Minister Koizumi have agreed that advances in technology and the evolving nature of the threats that we face impose on both of our countries a responsibility to modernize the alliance. In this process, our continuous guiding principle is the American commitment to the defense of Japan and the peace and stability of this region.

I can assure you now that no decisions will be made without full consultations with the Government of Japan. As always, our key objective is to determine a future U.S. force structure in this region that, consistent with the changes Japan is making in its own force structure, strengthens deterrence and strengthens the alliance. At the same time, we are very much aware that along with the positive effects of the U.S.-Japan military alliance, there are burdens associated with U.S. bases here, especially in Okinawa, and we are taking steps to "reduce our footprint," to reduce the burden on the people of Japan. At the same time, we want to say that one of our other bilateral goals is to expand our ability to train, plan, and operate together, including in such areas as missile defense, and take our alliance into new areas of international cooperation, such as the recent cooperation that we exhibited in providing relief in the areas affected by the tsunami in Southeast Asia.

As we move ahead, Japan will have to make its own decisions about how far that international cooperation should extend. There is much debate in Japan right now regarding constitutional change. It's not for me to recommend or support any particular version of the constitution. That decision is Japan's decision alone. What I will tell you is that America's welcomes a Japan that is more engaged, that has a more prominent profile, and whose voice is heard more clearly. We think these things are commensurate with Japan's status as a great world power.

However, Japan's status as a great world power depends not only on its political and Self-Defense Forces, but also depends on the Japanese economy. That's the fourth area of concern for the Japanese people.

As you all know, Japan and the United States represent 40 percent of the world's GDP. The recent news articles you've seen about China surpassing the U.S. as Japan's largest trading partner have in some cases reported only a half-truth. It is true that China is going to be a growing part of Japan's economic landscape but the interlinkages between the Japanese economy and the American economy are so great that we will continue to be interlinked far, far into the future. As a result, as Japan continues in 2005 to build an economy that is able to have sustainable growth, we in the United States will definitely be one of your strongest supporters.

I think that the Government of Japan is taking many positive steps towards this goal. The Prime Minister's statement in the Diet of October last year, "There can be no rebirth and development for Japan without structural reform," is a true statement and one that gradually is being implemented.

I think for this year it will be critical that the privatization of the postal services proceed along lines that are both ambitious and market-oriented if it is to achieve a maximum economic benefit for the Japanese economy. Reform must aim to allow for true competition, such that all advantages now accorded to Japan Post over the private sector competitors are eliminated.

But more generally, the U.S., and many, many people in Japan, have urged the Government to make special efforts to implement a more transparent regulatory system across the board. We further urge that Japan continue to deregulate certain key sectors, including financial services, education, energy, medical services, transportation and telecommunications. We agree with many in Japan who believe that these steps will guarantee greater fairness, predictability and accountability. This will permit greater foreign direct investment in Japan - investment that creates jobs and growth for the Japanese people.

The final area of concern to the Japanese people, at least according to Bungei Shunju, is trade liberalization and Free Trade Agreements, or FTAs. I think that this is an area that is very important to both our countries and to the world as a whole. My government has made it clear that we support FTAs as long as an FTA is trade-creating, rather than trade-destroying, we will support it. We support FTAs among APEC members. We have tried to promote trade liberalization in the Asia Pacific region both through bilateral agreements - and we are ourselves have done an FTA with Singapore; are in negotiations with Thailand and others in this region and also through the multilateral mechanisms of the WTO. We think that these levels, bilateral - actually, regional, which would include APEC, and multilateral, which includes the WTO, complement each other.

The United States believes that the WTO, in and of itself, is extremely important. In this regard, we hope that this year will be the year that we can all push for a comprehensive agreement and reach a successful conclusion to the Doha Round. We've put forward a comprehensive agricultural trade reform proposal calling for the elimination of export subsidies, cuts in trade-distorting domestic subsidies and the lowering of average allowed global tariffs.

We have, in fact, proposed eliminating all tariffs on consumer and industrial goods by 2015. The U.S. plan for zero tariffs is comprehensive and would benefit both developed and developing countries. According to the World Bank, developing countries would gain nearly two-thirds of the benefit from global tariff-free trade in goods including agriculture. Furthermore, if we did have this tariff-free trade, we could lift 300 million people above the poverty level.

So as you can see, the possibilities for increased global prosperity offered by greater liberalization are considerable, but the window of opportunity for the Doha Agenda is closing. We don't have much time left in this year before the fall Hong Kong ministerial to get our collective act together. I'm optimistic that Japan will play a responsible leadership role and will respond creatively and usefully to the great opportunities presented by the Doha negotiations, but it would not hurt if everyone around this table kind of helped to try and give it a push.

Well, right here I'm supposed to talk about American beef. Well, what can I say about that? Besides the fact that it's good - that's true. You know, on February 11, Yoshinoya opened its doors one more time and they put out a million and a half bowls of gyudon and it was not enough. The demand was enormous. Yesterday, in the Diet, I understand that Director General Nakagawa from the Ministry of Agriculture, Forestry, and Fisheries told the Diet that, "Yes, we think the Americans do have a way to tell the age of the beef and thus can export safe beef to Japan." So what's the hang up? What are we waiting for? I think we need to do this and we need to do it now. I intend to continue to say that for as long as I am here, and as long as the beef doesn't flow. Because, I fully hope that the next time we have a dinner like this, you'll be serving American beef! Shinpai shinaide.

But anyway, I've sketched out a kind of optimistic view and that's because I'm an optimist. I have served in Japan twice. Once during the "bubble" years from '86 to '89 and now this time at the end of the "ten lost years" and both times, the industriousness and the desire of the Japanese people to succeed has been very obvious. The creativity of the Japanese people has also been obvious. The opportunities for success have also been there. Both times, although it's taken a little bit longer this time, Japan has grasped those opportunities and has moved ahead. I think that this time, we're going to do the same.

As we begin the 151st year of our relationship - wow! - we're the two richest and most successful societies that the world has ever seen. As such, we have a responsibility to lead the rest of the world forward and to share that wealth and to share that success with the rest of the world. I think the leadership of this gathering, I-House and the leadership of the America-Japan Society are representatives of that group of people that has the power and that has the ability to continue to bring the U.S.-Japan relationship forward and to share those benefits with the rest of the world, and particularly, I think, with China. So, without further ado, I'd like to close my remarks and take your questions. Thank you very much.