No. 8 — February 25, 2000


Weekly Review

--- by Barbara Wanner

Two high-level American and Japanese diplomatic delegations crisscrossed the Pacific during the week of February 13 to discuss a number of important economic and security-related matters. Garnering the widest press coverage was the February 18 meeting in Washington between President Clinton and Foreign Minister Yohei Kono. Their 20-minute tete-a-tete culminated in a joint call to members of the World Trade Organization to begin a new round of multilateral trade negotiations before the July 21-23 summit on Okinawa of the leaders of the Group of Seven industrial nations plus Russia. Mr. Clinton also pledged Washington's support to help ensure a successful G-8 gathering.

Yasuhisa Kawamura, a Ministry of Foreign Affairs press officer, described as "very, very meaningful for Japan" the consensus between Mr. Clinton and Mr. Kono on the need to jump-start the launch of the next WTO round as well as the Foreign minister's talks later that day with U.S. Trade Representative Charlene Barshefsky, National Security Adviser Sandy Berger and National Economic Council Chairman Gene Sperling on the global trade talks and other subjects. The delegation seemed particularly pleased that Ms. Barshefsky responded positively to Mr. Kono's proposal that the senior trade officials of Canada, the European Union, Japan and the United States immediately begin discussions to iron out the sticking points that led to the December 3 collapse of the WTO ministerial meeting in Seattle.

Mr. Kawamura's qualification that "there is still more to be done" referred to the lack of international agreement on conditions for beginning a new series of trade-liberalization talks — namely, Washington's continued refusal to open up for review the U.S. antidumping regime. American trade negotiators' staunch opposition to what they argue was an effort by Japan, the EU and other trading partners to weaken U.S. antidumping statutes was one of the many disagreements that contributed to the failure of the discussions in Seattle (see JEI Report No. 46B, December 10, 1999).

In his February 18 meeting with Mr. Kono, Mr. Clinton underscored his administration's willingness to show "maximum flexibility" in tackling this and other stumbling blocks, but the president made it known in no uncertain terms that an examination of U.S. antidumping policies and practices still was off limits. International Trade and Industry Minister Takashi Fukaya's February 22 comment to Japanese reporters that Tokyo "sees no need to change its stance" about putting U.S. antidumping laws on the agenda for a new WTO round suggests that while the two countries may favor an early negotiating start, realizing that goal within the next four months will be a challenge, to say the least.

Insiders suggest that the cautionary words of the Foreign Ministry spokesperson also might aptly describe the outcome of recent deliberations in both capitals on security issues. During a February 15-16 swing through Tokyo, Deputy Secretary of State Strobe Talbott evidently was unable to persuade Mr. Kono and other senior Japanese officials to maintain the current level of financial support for U.S. military facilities within the nation's borders. The Foreign minister's February 18 meeting with Mr. Berger and his February 20 discussions with Secretary of State Madeleine K. Albright on this same issue proved just as unproductive.

Mr. Kono reportedly told Mr. Berger and Ms. Albright that while he "understands the strategic importance of the U.S.-Japan security alliance, the two nations should take into account various economic conditions." Foreign Ministry people have been careful to point out that Mr. Kono did not flatly tell U.S. officials that Tokyo, indeed, would reduce host-nation support. However, experts have construed his carefully worded statement as Tokyo's continued refusal to reverse the 5.4 percent reduction in the facilities- improvement element of host-nation support contained in the FY 2000 general account budget.

In 1978, under what now is called the Special Measures Agreement, the Japanese government began to assume responsibility for the costs of Japanese nationals employed at U.S. bases and for utilities and expenses related to the in-country relocation of American armed forces. Tokyo has referred to these expenses collectively as the "benevolent sympathy budget" because it assumed them at a time when the U.S. budget deficit was starting to widen while Japan's finances still were relatively healthy.

The two nations' budget positions now are reversed. Japanese officials, whether cabinet members or bureaucrats, have argued in recent months that a continuation of host-nation support at the FY 1999 level of nearly ¥250 billion ($2.3 billion at ¥110=$1.00) would be politically untenable given taxpayers' anxiety about the country's economic outlook (see JEI Report No. 4B, January 28, 2000). Washington opposes any reduction in host-nation support, arguing that such assistance represents an important, concrete demonstration of Tokyo's commitment to the bilateral alliance. "Host-nation support is not just another line item in the budget. Japan and the United States bring different contributions to our security alliance," Mr. Talbott reportedly told Mr. Kono in Tokyo. Foreign Ministry spokespeople made no comment until after Mr. Kono's meeting with Ms. Albright and then would say only that "talks on this issue will continue."

Nor did Mr. Kono's visit seem to facilitate progress on another nettlesome bilateral security issue — relocation of the U.S. Marine Corps heliport at Futenma Air Station on Okinawa, as called for in the December 1996 Special Action Committee on Okinawa report. The Foreign minister conveyed the prefectural government's demand for a 15-year limit on the U.S. military's use of a dual-purpose airport that will be constructed near Nago on the northern end of the main Okinawan island. This proviso was critical to winning southern islanders' support for the new airport at a time when they have grown weary of bearing the lion's share of the burden of hosting American forces in Japan (see JEI Report No. 4A, January 28, 2000).

Japan Defense Agency Director General Tsutomu Kawara made a similar request on behalf of Okinawans during an early January meeting at the Pentagon with Secretary of Defense William Cohen (see JEI Report No. 2B, January 14, 2000). The U.S. defense chief was said only to have referred to the importance of language in the April 1996 U.S.-Japan security declaration. This statement, issued by Mr. Clinton and then-Prime Minister Ryutaro Hashimoto, declared that the two countries should continue to discuss how changes in the international security situation might influence adjustments in the U.S. force structure in Japan.

Mr. Berger also apparently skirted the issue of the 15-year time limit demand when he met with Mr. Kono, merely saying that "the United States will continue to consult closely with Japan on defense policies and military postures, including the U.S. force structure in Japan in response to the changes that may arise in the international security environment." Although Department of State officials refused to divulge the substance of Ms. Albright's meeting with Mr. Kono, it is unlikely that her position on the 15-year time limit differs from that of Messrs. Cohen and Berger.

Based on a comment made last November by Deputy Assistant Secretary of Defense for Asia and Pacific Affairs Kurt Campbell, who said that the United States "does not like time limits imposed" on the U.S.-Japan security relationship, defense observers have interpreted the replies of Messrs. Cohen and Berger as Washington's de facto opposition to the 15-year deadline for military use of the proposed Nago facility. A February 16 report by Kyodo Wire Service, quoting unnamed political and diplomatic sources, confirmed that Mr. Cohen, in fact, "clearly rejected" the time constraint during his early January meeting with Mr. Kawara.

Discussions of the diplomatic and security-related issues on Mr. Kono's agenda were not all acrimonious. Both sides concurred on the need to continue to cooperate closely in dealing with North Korea. In his meetings with Mr. Berger and Ms. Albright, the Foreign minister also reportedly explored what role, if any, the People's Republic of China might play in the Okinawan G-8 summit.

However, given that Washington and Tokyo still remain far apart on key issues related to a new WTO round and on other economic matters, including deregulation, as well as on central elements of the U.S.-Japan security relationship, a sizable negotiating work load has developed. Ratcheting up the pressure even more is the fact that the United States and Japan have set their sights on resolving these disagreements before the July summit. While eleventh-hour transpacific agreements often are the norm, the two sides may have bitten off more than they can chew this time.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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