Address to the Yomiuri International Economic Society

Ambassador J. Thomas Schieffer
Osaka, Japan
April 4, 2008

AMBASSADOR SCHIEFFER: Thank you very much. It is a great honor to be here with you today. Governor Hashimoto, Mayor Hiramatsu, Ladies and Gentlemen:

I always enjoy being in Osaka, and it is a particular honor to be here at the Yomiuri International Economic Society. For much of Japanese history, Osaka and the greater Kansai region have been at the center of the Japanese economy. Some of the most important commercial institutions were born and developed right here, where you know business and the prosperity it can bring to a community. Today, I would like to share some thoughts with you on the nature of the global economy and some things Japan and the United States can do to manage it for our benefit.

Globalization is a word we often hear in pejorative terms. When a plant closes in America or Japan, globalization frequently gets the blame. Less often do we hear globalization getting the credit for creating jobs.

I was reminded of that a couple of years ago when I attended the opening of the new Toyota pick-up truck assembly plant in my wife's hometown of San Antonio. That plant created 4,000 new jobs in a chronically depressed area of the city. It gave opportunity to a segment of the population that often gets cited as being left behind by the effects of globalization. On the opening day that new Toyota plant had a workforce whose ethnic origin was Hispanic, African American, Anglo and Asian. The jobs created were not just low-end subsistence level jobs, either. The average hourly wage scale at that plant was $18.39 an hour compared to $11.30 for the rest of the city and $12.27 for the state.

No doubt there were many reasons why Toyota built that plant in San Antonio. Texas maintains a good business climate. The city, county and state governments provided tax incentives. They also built new infrastructure. And, San Antonio lies in the heart of the American pick-up truck market. But, I think one of the biggest reasons San Antonio was favored was because of its close proximity to Toyota plants and suppliers in Mexico. In fact, because of the North American Free Trade Agreement, or NAFTA, as we call it, that San Antonio plant had free access to parts and suppliers in Mexico, the United States, and Canada. For all those reasons Toyota said "yes" to San Antonio and San Antonio and Texas got to say "thank you" to Toyota. Nobody at the opening of that plant was talking about the negative impact of globalization. On the contrary, they were talking about the promise of the future. And well they should.

In essence what happened was, a Japanese company saw an opportunity to sell Americans a product they wanted. Toyota and its suppliers invested $1.6 billion dollars to make it happen. In the process, they created more jobs in four countries- Japan, the United States, Mexico, and Canada. Not a bad day for those who argue that free trade and free markets create far more jobs than they eliminate. Free trade and free markets do something else, too. They generate competition, improve quality, increase choices, and reduce prices to the consumer. Now what is so bad about that?

When communications improve, when productivity increases, when creativity is encouraged, markets work to our advantage. Globalization is not something to fear; it is something to manage. And we in the United States and Japan can manage it as well as anybody in the world.

There is nothing new about the benefits of trade or the advantages of a foreign market to a domestic economy. Goods have been moving around the world for millennia, with trade connecting people and improving their lives. Ancient Romans depended on Egyptian wheat for their daily bread. American cotton kept the textile mills of the British Midlands running during the 19th century and we all know the impact Middle East oil has had on the economy of the 20th century.

The stress foreign competition sometimes creates in domestic markets is not new either. In the formative years of the American experience, much of the discord between North and South could be attributed to opposite perspectives on trade. Shopkeepers and infant industries in the North wanted protection from cheaper goods produced overseas while the South wanted open markets for the commodities they had to trade and the cheaper imports they wanted to buy. Each side was convinced that if the other would just be content to bear a larger burden temporarily, the nation as a whole would ultimately benefit.

Over the years, our basic understanding of trade has deepened. Yet, we often fail to point out the benefits of trade because they are frequently more complicated to explain than the negatives of a plant closing. This lack of explanation contributes to the anxiety people feel across the world about the effects of globalization. Granted the sense that trade creates jobs rather than destroying them sometimes seems counter intuitive, but it is true. Trade generates far more jobs than it destroys.

The explosion of trade in services is a case in point. Competition for a wide variety of activities ranging from low-skilled functions like data entry to high-skilled activities like software development, consultancy, medical services, and research have produced tremendous job growth in the service sector. A range of services everyone once believed to be literally "non-tradable" moves around the world electronically everyday.

This fact was brought home to me while I was the American Ambassador to Australia. I visited the Adelaide office of an American company called Electronic Data Systems, or EDS. It was stunning for me to learn that American engineers were working on problems eight hours a day before handing them off to Australian engineers who would work on them for another eight hours. Then, before they went home, the Australians would send their work to British engineers who would perform the last eight hours of what had become a twenty-four hour workday. Put another way, when the Americans went to work the next morning, they were two days further down the road than when they left the office the night before. Think of the productivity gained and the time saved for the benefit of the customer. And do not forget that time is the most valuable commodity any of us have because it is the one thing that is truly irreplaceable. This kind of connectivity will continue to accelerate the pace of change in business.

Moreover, the old development paradigm of a country moving step by step from agriculture to manufacturing to services no longer applies. According to a World Bank study, between 1995 and 2005, the proportion of the global labor force employed in service industries rose from about 35% to almost 40%, while employment in the agricultural sector fell from 44% to 40%. Employment in manufacturing stayed constant at a little more than 20%. Here in East Asia, service sector employment expanded by close to five percentage points while employment in manufacturing increased by only two tenths of one percent. This despite all the talk about China becoming the manufacturing center of the global marketplace.

The World Bank estimates that the service sector exports may be growing by as much as 30% a year. Some developing countries already have seen explosive growth in this sector. Between 1994 and 2003, Indian firms' service exports rose nearly 700 percent. China, Brazil, and Argentina enjoyed increases of more than 200 percent. Consequently, like it or not, the challenges and opportunities of foreign competition are no longer confined to farmers and factory workers. White-collar professionals - doctors, accountants, researchers, and even professors - will increasingly have to compete in the global marketplace.

Job security is an inevitable worry of this new economic dynamic. New businesses will be born, mature and die at an accelerating pace. The World Bank estimates that, in many countries, about 20% of firms are created and destroyed each year, affecting 10-20% of the total workforce. New technologies and innovations at home as much as overseas competition lie behind this phenomenon. In the United States alone, more than seven million jobs have been destroyed on average every quarter over the last decade. This number is truly frightening until you hear something else: the United States has more than compensated for the loss. Since 2003 alone, the American economy has enjoyed a net increase of eight million new jobs. This cycle of "creative destruction" arising from the entry and exit of firms into and out of the economy has largely been driven by gains in productivity and overall technology.

An increasingly service-oriented global economy - where knowledge and ideas are as much a part of trade as cars and television sets - is a fact of life. It is not going to change no matter how much some might resist it. We cannot expect the old economic paradigms to continue. Rather than bemoan the threats of global competition, I believe we must focus on the opportunities. We must develop our strengths rather than giving in to our fears.

Protectionism never gives us more than a short-term fix and often those quick fixes just cause us more long-term pain.

All of us must recognize the advantages of having flexibility in our economies if we are to meet the challenge of globalization. In America, this flexibility translates into a constant movement between productive jobs. There are 153 million American men and women in our workforce. The typical American worker has had, on average, ten jobs before reaching fifty years of age because for the most part, better opportunities have presented themselves. During any one year, millions of Americans will change jobs. But, because the American economy is so adaptable, the rate of long-term unemployment in the United States is much lower than in other parts of the developed world. Only about 18% of those unemployed in the U.S are out of work for more than 27 weeks. This figure is so much lower than the 73% of long-term unemployed in Germany or the 62% in France.

Let me be clear on something else: workers as well as businesses benefit from this flexibility. Overall disposable income in the United States has risen 12 percent since January 2001, an average of over $3000 in the past seven years. Moreover, Department of Labor studies show that for every $1 increase in employee compensation over the past 15 years, 67 cents has gone to hikes in wages and salaries and 33 cents as improved benefits including paid leave, bonuses, employers' health insurance, social security, Medicare, and retirement contributions.

Education is a key factor in meeting the challenge of globalization. Although most people tend to think of globalization leading to jobs moving from highly paid skilled workers in rich countries to unskilled workers in poor countries, the fact is that in developed and developing countries alike, the wage gap between skilled and unskilled workers has been increasing. Wherever they might happen to live, individuals that have the knowledge and the abilities to satisfy the demand of the global marketplace are prospering while those who lack the requisite skills and education are falling further behind.

The other important element in meeting the globalization challenge is innovation. New ideas create new products. New products create new customers. New customers create new demand. New demand creates new supply. This endless chain of new developments creates an endless number of new opportunities and those new opportunities create jobs where people never thought they were before. All of this change is accelerated by the speed at which we are able to transform knowledge from one marketplace to another without border checkpoints or transportation choke points. Customers, be they retail or wholesale, businesses or consumers, can find each other more quickly, enlarging their numbers so that their desires can be met sooner at a price they can afford better. That is the essence of the challenge faced by both the economies of the United States and Japan.

In confronting this new economic reality, the United States and Japan should both remember that we have tremendous advantages. We have highly developed educational systems that can produce workers capable of meeting any challenge. The United States spends more on education as a share of gross domestic product than almost any other member country of the OECD. Japan may spend less on education, but it has the highest rate of graduation from university programs of any country in the OECD. Ninety-one percent of Japanese who enter higher education complete their studies. As a result, over half of Japanese between the ages of 25 and 34 have a university diploma or its equivalent, well above the OECD average of thirty-two percent. You have 150 universities right here in the Kansai area. They are producing the raw material of our age: knowledge.

The key to our future prosperity whether we are Japanese or American is to transform that knowledge into new products and new services that can serve new customers in a new world economy. We can do this if we understand that competition delivers more jobs than protectionism.

Here in Japan you have experience on both sides of that proposition. Productivity rates in manufacturing are high. No one can deny that Japanese manufacturers produce some of the highest quality manufactured goods in the world. Net exports, in fact, have been an essential part of Japan's current recovery, accounting for about one-third of economic growth over the past five years.

At the same time it cannot be denied that Japan's service sector, despite its size and contribution to the overall Japanese economy, is relatively inefficient. A 2007 Cabinet Office report to the Council on Fiscal and Economic Policy identified a labor productivity "gap" between the United States and Japan. Japanese productivity in sectors such as transportation, retail, business services, hotel and restaurant services is only about a third of what it is in the United States. Moreover, the "gap" has been widening since the mid-1990s. Meanwhile, Japanese wages for most people have stagnated, individual consumption is weak, and economic growth, though positive, has been modest.

In terms of flexibility, Japan's major labor laws have changed little since the 1960s, when markets were far less global. What changes have occurred have been driven by businesses in a piecemeal manner. The dramatic rise of "non-regular" workers to about one-third of Japan's workforce is a case in point.

We should all remember that changes that enhance labor market flexibility tend to increase productivity, because people are freer to move to jobs that match their skills and abilities.

In the United States we learned long ago, that putting all our players on the field gives us a better chance to win the game. Japan still has a tremendous untapped human resource in the form of Japanese women who are among the world's most educated and accomplished people, yet women's participation in the workforce in career track and management jobs is significantly lower in Japan than in Europe or the United States. From a national economic standpoint, every woman who moves from a job in which her talents are not fully used to a job where they are represents an increase in national average labor productivity.

Foreign direct investment also increases productivity. According to OECD statistics, labor productivity of foreign affiliates in Japan is more than 50% higher than other Japanese firms. For service firms, foreign affiliates are almost twice as productive.

Japan brings tremendous fundamental resources to the globalization challenge. You have an educated populace, available capital, and a proven ability to compete. What remains is finding a way to adapt those resources to the demands of a new global economy.

Why does that matter to the United States? Because the health of the Japanese economy is important to the health of the American economy, and vice versa. We know that our future prosperity is intertwined with yours. We also know that a downturn in the American economy can cause trouble for your economy. That is why we are working hard to strike the proper balance between regulatory oversight and the genius of free markets.

We understand that the United States will continue to be the engine that pulls global economic growth. For decades, we have been the world's largest importer. Since the 1970s, about one-fifth of all internationally traded goods have in fact been exported to the United States. When the American economy slows, history shows the global economy slows with it. But we also know that if another worldwide recession occurs, the pressure on Japan to reform its economy will increase dramatically. Our hope is that Japan will realize its potential as another engine of global growth. As the world's second largest economy, Japan can make a huge contribution to continued global prosperity by further travel along the road to economic reform.

Increased labor mobility, greater productivity, and more open, better regulated capital markets could make Japan much more competitive in a globalized world than you are today. Reform of the agricultural sector of your economy could also give Japanese consumers more choice with lower prices than you have today.

On this last point it is important to add that agricultural liberalization will also advance the Doha Round of the WTO and deepen Japan's integration into the global economy. A successful Doha Round that opens up international trade in agricultural products will bolster Japan's prosperity by freeing up resources that are being used to protect a declining sector of your economy.

This year Japan will host the G-8 Summit. In 2010 you will host APEC. Both events give Japan a chance to show leadership in meeting the challenges of an ever more rapidly globalizing economy. The United States hopes that we can join you in your efforts. The two of us have everything to gain by increased cooperation and coordination. Together we already produce 40% of the world's Gross Domestic Product and we can do much to spread prosperity around the world. But we must also realize that if we do not adapt to the changing demands of a new world economy we could lose the leadership roles we have long enjoyed.

According to Harvard professor Juan Enriquez, in 1840 two countries - China and India - accounted for 40% of world trade. They produced the best and most luxurious handmade goods in the world, the finest silks, jewels and jade. Those goods were in high demand and many in China and India thought their future would never dim. But something else was going on in the world in 1840. The Industrial Revolution was beginning in Europe and machines were transforming the way work could be done.

Technology in the United States and Europe allowed one man to do the work of ten, and then a hundred, and then a thousand. In the years that followed, prosperity and trade moved away from China and India to Europe and America and it is only now that it is returning to places where it once reigned.

Change is inevitable. Whether we manage change or change manages us, is a choice we can make. Neither the United States nor Japan has anything to fear from a globalized world. We helped create it. We can still lead it. But if we stop trying to compete, if we argue that protection gives us greater opportunity to succeed than innovation and creativity, then we will lose the future of the 21st century just as surely as China and India lost the future of the 19th century. The stakes are simply too high for either of us to make that choice.

There is no reason for America to fear the future. There is no reason for Japan to fear the future. We are both still on the right side of history - the side that says an educated, democratic, tolerant citizenry will have the ability, desire and courage to make the right choices for itself and the rest of humanity. All we have to do now is roll up our sleeves and get to work. Success will follow. Thank you very much.

QUESTION: [inaudible] the Kansai Federation, and also I am vice president of the international department. I've been working very hard to promote FTAs and persuade the Japanese government. Free trade promotion was highlighted in your presentation, and I really felt much sympathy. And I also am the president of the Japan-U.S. Association on an FTA between U.S. and Japan. I really want to see the day when we'll make that a reality. So let me ask a question. The American election - what is the direction of the American election? Under the Bush administration, you are the Ambassador under that government, and you are also a member of the Democratic Party, though the government is Republican. But as this is a delicate question, I'm not going to ask it. [laughter]

In Europe, some governments have said they will boycott participation in the opening ceremony of the Beijing Olympics in August. So what is the attitude of the American government? And does America think this will come to pass?

AMBASSADOR SCHIEFFER: I think that the President said the other day that he hopes that the Olympics will be about sport and not about politics, and that he plans to be there at the opening ceremonies in Beijing. Let me touch on a couple other things that you mentioned in your remarks. First of all, I am a Democrat in a Republican administration, and people find that just as hard to understand in Australia as they do here in Japan. We have a long tradition in the United States of, particularly when it comes to international affairs, of members of one party being in the other administration. I'm frankly in the administration because of my personal relationship with the president. I supported him when he ran for governor of Texas. I supported him when he ran for President. And he asked me to go first to Australia and then to Japan, not on the basis of what my party affiliation was but because of what he thought my ability was to represent America.

And I think that that is an important thing to remember when people - I'm often asked about, this is an election year, and do I think that there is a difference in the way Democrats will approach Japan, for instance, than Republicans would. I don't think there is, because I don't think there is a Democratic position on Japan or a Republican position on Japan. I think there is an American position on Japan, and it grows out of the realization that the American people have that our future is inextricably tied to the future of Japan. It has been since the end of World War II. The American people understand that if we're going to be successful in Asia, the best way for us to be successful is to have a strong, healthy American alliance with Japan. When that is the case, we believe all things are possible. If that were not to be the case, we think it would be difficult for us to have much, if any, success in Asia. So I think the people of Japan can rest assured that whoever is elected in the coming election will understand the importance of Japan to American security.

And let me touch on one other thing that you raised, and that is with regard to a possible free-trade agreement with Japan. I think the United States would look favorably on negotiating a free-trade agreement with Japan if Japan made the decision to include all sectors of its economy in the negotiations. What does that mean? It means agriculture. We frankly don't do free-trade agreements unless they include agriculture. This idea often comes up, and then people will mention to me - in Japan in particular they will say, "But you must understand that the Japanese are very concerned about food security." And I think that that is a legitimate concern, particularly given the terrible things that happened after the war, when people in Japan starved. And people recognize the importance of being able to feed their population.

But the thing I like to point out is that over 60% of the caloric intake the Japanese have today comes from abroad. The average age of a farmer in Japan today is 70. Young people are not going into farming in Japan. If Japan doesn't open its sectors to agriculture from abroad, it will have more difficulty feeding itself 10 years from now than it does today, or 20 years, or whatever. If that one thing is keeping Japan from being able to do a free-trade agreement with the United States, that seems to me that that would be a real shame.

Why not open Japanese agricultural markets to American, Canadian, Australian agricultural products? Those great democracies are not going to blackmail Japan over food policy, for political reasons with food. They're just not going to do that, because they share the same kind of values and faith in the democratic process that Japanese do. So I think if we had a thoughtful discussion about the future of our two economies and how it makes so much sense for them to be more integrated and more cooperative than they have been in the past, I think we could make great strides in negotiating a free-trade agreement, or getting to the point of negotiating a free-trade agreement. I think it is in Japan's interest and America's interest to do that, and I hope that in the future that will be a goal of people across the spectrum in both countries.

QUESTION: Ambassador Schieffer, thank you very much for the wonderful lecture. As you mentioned, globalization is indeed very essential and will lead to economic development. Countries have to adapt themselves to the changes. But, as the world is globalized, trust and reliability between peoples and between nations is necessary; otherwise there will be conflict. In Yokosuka, there was a very unfortunate incident. An American did something extremely inappropriate. It is not a sensitive issue at the present moment, though, so I am very grateful the situation is rather stable. However, for the U.S. and Japan, their relationship, if you look over the Asian region, there are still some fragilities, instabilities.

So the Japan-U.S. alliance and American base issues are indeed essential for us. As the Kansai Federation, we've been forming dialogues with the people of Okinawa. Since there are American bases here in Japan, as you mentioned, we cannot completely avoid any troubles or incidents. There are likely to be some issues. But if such incidents take place, if there is trust and reliability between the two nations, we can resolve the problems. So the Status of Forces Agreement is indeed important. We have to once again review that. That should be very important. That's my comment.

And as for the Chinese situation, China will develop further, but still China is not yet a mature nation. It has many problems and issues. Japan cannot control or manage it on its own, so the U.S. and Japan should cooperate with each other together with Korea. So in order to stabilize Asia, we'll have to have continuous discussion between the two countries or the three countries, not only on the economy but also on security. And we'll have to be more serious on this. The people are only looking at the bright side of China, but there will be some difficulties and pitfalls, so maybe we have to look very cautiously at the situation of China together with the U.S., Japan, and Korea. At Harvard University, we've been having a dialogue over the past 15 years. Sometimes we have disagreements, but our discussion has been continuous over the past 15 years, because there is trust between the parties. Even when there has been a quarrel or some conflicting ideas, we can have very good discussions. So trust and reliability are indeed very essential. Thank you.

AMBASSADOR SCHIEFFER: I think that the events in Yokosuka in the past few weeks have been tragic. No one can condone the kind of event that occurred there. It is just not something civilized society can tolerate. But I think you did see, though, it is a situation in which Japan and the United States worked together to try to render justice in the matter. Now the whole thing hasn't played out, because it is in the process of going to trial, but every American regrets that this happened, and every American serving honorably here in Japan - and that is the overwhelming majority of men and women in and out of uniform - was shocked and outraged by this event, just as much as in the Japanese would be, as well they should be. That's why I went to the mayor of Yokosuka yesterday, to the foreign minister and to the governor of Kanagawa to express the American regret at the event itself and to pledge our continued help in trying to render justice in the matter. Having said that, I think it is important to understand how well the Status of Forces Agreement worked in this process. I think we have learned from past mistakes. In the very beginning, when the individual was identified as a person of interest in this crime, our investigative arm of the military sought and received cooperation from the Japanese, both at the prefectural and national levels. We investigated the crime together. Americans and Japanese interviewed this individual together. When the Japanese finally decided - and the process of the investigation with the individual himself began by the Americans taking him into custody. And present at the time that the Americans took him into custody were Japanese prefectural police from Kanagawa and federal police. So it was not something that the United States was doing on its own. It's something we were doing in coordination with the Japanese. We held the individual as the investigation progressed. We provided information to the Japanese that could be helpful to them in the investigation. And I don't want to go into all of the details of the investigation, but I'm confident that as the matter comes to trial and as it comes out, the Japanese will understand that the United States did everything within its power to cooperate and help in the investigation. And I think when the Japanese finally decided that they wanted to take custody of this individual, within a matter of minutes custody was rendered to them. That to me is a system that is working, and it is one that both Japanese and Americans can take pride in.

Now let me say with regard to your comments on China and the Republic of Korea - I couldn't agree more that we need to explore more ways to cooperate and to have common approaches to world problems. In the United States, we believe that there is no need to contain China. But what we would like to do is to integrate China into a new international order in which the Chinese assume the responsibilities of a great power, not just the aspirations of a great power. What do I mean by that? What I believe we think can happen is that if China becomes more engaged in the international system - if China recognizes the benefits from the rule of law, that it benefits from transparency in government, that it benefits from international trade, and that it has a stake in preserving the international system, building the international system, and integrating it in such a way that it is a peaceful international system, then we think real progress can be made.

And getting back to the point I made earlier, we believe that the key to integrating China is a strong and healthy Japanese-American alliance, and when that occurs, we believe that helps us - and the Japanese and the Chinese - to integrate China into the international system.

With regard to the Republic of Korea, I think that we are entering a new day in which increased cooperation between the United States, Japan, and the Republic of Korea will occur. I think that's a good thing. And I think when we look at the situation in the bilateral relationship that the United States has with Japan and the bilateral relationship that the United States has with Korea, we want to assure both parties that more cooperation between Japan and Korea, the Republic of Korea, will not diminish their relationship with the United States; it will enhance it, because we think that the three of us working together are a greater force for peace, democracy, and tolerance in the world than if we took separate paths in our foreign policies.

And so I am very hopeful that this new day that is dawning will see greater cooperation, greater coordination, between our three countries. I think it would work to the benefit of all of us.

QUESTION: Thank you. About globalization, we will not be afraid. And you talked about how the wages of Toyota were $18.39, and that was 50% higher than average. If a big foreign company came to Japan and paid that kind of wage, the people would criticize it and say that they were suffering. Don't you see that kind of situation in the United States of America?

AMBASSADOR SCHIEFFER: You sure don't see that if those people are getting that $18, that's 50% more than they are someplace else. I think the wage scale that Toyota is paying is not in line with what automobile workers are making in other parts of the country. But the point I was trying to make is that sometimes people think that globalization just creates low-end, low-paying jobs, and in this instance, with regard to hourly wage scales in Texas, that plant substantially increased the amount of good jobs that were available in the community, and that's why the community embraced it. Toyota is a very, very popular company in San Antonio today. And they do other things, too. They became a very good corporate member of the community. They are making large charitable contributions to schools and other institutions in the city, and that too enhances their standing in the community. And I think that the difference - and I must say that the Japanese automobile industry as a whole understood the value of investing in America, because General Motors and Ford and Chrysler have gone through difficult times recently, and if they had gone through those difficult times in the 1980s, there would have been a lot of Japan-bashing as a result. I think what is happening in America today, because so much investment has been made by Japanese automobile companies in America, Americans are working for those companies, and they are producing the products that Americans can buy. And I think that's worked to the benefit of the Japanese car manufacturers, and I think it's worked to the benefit of Americans in general, and that's why I don't think you see the Japan-bashing going on now that you might have seen 20 years ago.

QUESTION: Today, you have come down to Kansai, and you met with the governor and mayor and business leaders. We want to make this Kansai area very attractive and energetic. You have already been in Japan for three years. So compared with Tokyo, in Kansai what should we do? Do you have any advice for us? How can we energize the Kansai area and make Kansai more attractive?

AMBASSADOR SCHIEFFER: I think it's very attractive right now, and I think that not only the Kansai, but all of Japan is attractive to American companies, American investment, Americans who see a great opportunity to do business in a country where the rule of law prevails, and Americans are not discriminated against because they are Americans. So I think this is a great opportunity here.

I was talking to the governor and the mayor before the luncheon, and they were telling me about the plans to try to enhance the river here in Osaka to make it more like the Riverwalk in San Antonio where the Toyota plant is. I think those are great opportunities, and what I related to them was the experience that we had in San Antonio with that river. In the 1960s, when I was young and growing up in Texas, we would go to San Antonio, and that river was largely a concrete line of channel through the city. As a result of what we call the HemisFair that was in 1966-68, which was to celebrate the 130th anniversary of the revolution - the Texas revolution - the city and the state invested funds in that Riverwalk to try and create a critical mass of new restaurants, new retail outlets that people could come and visit, and today that Riverwalk is one of the great tourist attractions in the world - not just in the United States. And the mayor and the governor were talking about the effect that they had had when they saw it and the desire to do something like that here in Osaka.

I think that when we take the time to improve the beauty of our cities and the aesthetics of the places where people live and work every day, we not only enrich their lives, but we also make them places that other people want to come and see, and I think that that is a great opportunity for all cities across the world. How a city is planned, how it works makes a big difference in not only whether people want to live there, but whether people want to visit there in the future. I think this is a great area to visit. I enjoy coming down here every time that I have, and I also enjoy seeing the pride in the community that you have here. It is obviously a place that you want to prosper, and you invest your time and effort in trying to make the success of the whole area possible, so I salute you for that.