TALKING POINTS ON THE JAPAN ACTION PLAN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00759R000200200019-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: March 24, 2010
• Sequence Number: 19
• Publication Date: September 11, 1985
• Content Type: MEMO

TO:
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
EXECUTIVE SEWETARIAT
ROUTING SLIP
ACTION
INFO
DATE
INITIAL
1
DCI
2
DDCI
3
EMIR
4
D/ICS
5
DDI
6
DDA
7
DDO
8
DDS&T
9
Chm/NIC
10
GC
11
IG
12
Compt
13
D/OLL
14
D/PAO
15
VC/NIC
16
D/0Gi
X
17
NiO/ECON
~.
18
19
20
21
22
SUSPENSE
1 Sep
3637 (10-81)
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
W
THE WHITE HOUSE
CABINET AFFAIRS STAFFING MEMORANDUM
Date: 9/11/85 Number: 316984CA Due By:
Subject: Talking Points on the Japan Action, Plan
ALL CABINET MEMBERS
Action
0
FYI
Action FYI
CEA ^ ^
Vice President
State
Treasury
d
CEQ ^ ^
OSTP ^ ^
^ ^
Defense
^ ^
Justi
e
d
^ ^
c
Interio
D
^ ^
r
0
Agriculture
Commerce
M
^
McFarlane ^ ^
Labor
0
Svahn ^ ^
HHS
HUD
11
0
Chew (For WH Staffing) d ^
Transportation
E
d
^ ^
^ ^
nergy
0
^
Chief of Staff
.
^ ^
Ed
ti
d
^ ^
uca
on
11
^
-
OMB
^ ^
,
f~
QCIA >
^ ^
UN
11
r_1
.......: ................................................................................
USTR
0
d
'
Executive Secretary for:
GSA
^
^
DPC ^ ^
EPC ^ ^
EPA
^
^
^ ^
NASA
^
^
^ ^
OPM
^
^
^ ^
VA
^
^
^ ^
SBA
^
^
^ ^
REMARKS:
Attached for your use is a set of talking points on the
Japan Action Plan.
RETURN TO:
^ Alfred H. Kingon ^ Don Clarey
Cabinet Secretary ^ Rick Davis
456-2823 ^ Ed Stucky
(Ground Floor, West Wing)
Associate Director
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
THE WHITE HOUSE
September 11, 1985
MEMORANDUM FOR THE ECONOMIC POLICY COUNCIL
FROM: EUGENE J. McALLISTER c'r
SUBJECT: Talking Points on the Japan Action Plan
When Japan unveiled its Action Plan for Imports, the
Economic Policy Council asked that a set of talking points for
private discussions with the Japanese be prepared. The Treasury
Department, in cooperation with other members of the Council, has
prepared talking points which address the overall Plan and
comment on particular elements of the Plan, including increased
domestic demand, tariffs, import quotas, standards, government
procurement'and financial and capital markets. These talking
points are attached for your use.
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
Talking Points on Japan's Action Program
The U.S. welcomes the Action Program as an effort by Japan to
resolve trade conflicts. By itself, however, the program will
not eliminate the threat of protectionist actions, because it
does not go far enough in opening Japan's market, and what it
does achieve will come too slowly. Our ultimate objective is for
Japan to increase its imports and provide U.S. businesses with
access comparable to Japanese access to U.S. markets.
On the positive side, the U.S. Government finds encouraging:
(1) Recognition by the Japanese Government of the need to
open Japan's market and of Japan's role in the interna-
tional trading system.
(2) Prime Minister's personal leadership and involvement.
(3) Establishment of a follow-up mechanism in the Prime Mini-
ster's office to implement the program.
(4) Depth of work on standards and the emphasis on changing
Japanese attitudes and buying practices.
(5) Commitment to increase domestic demand and the establish-
ment of a working group to plan and implement this
policy.
(6) Decision to study distribution problems and commercial
practices. '
(7) Establishment of principles to guide the Japanese Govern-
ment in the future:
o Freedom in principle, restrictions only as exceptions;
ana
o Government intervention kept to a minimum so as to
leave choice and responsibility to consumers.
(8) Generalization of agreements reached in ROSS talks:
o Transparency; and
o Participation of representatives of foreign companies.
On the negative side, the U.S. was disappointed in several
respects:
(1) many of the measures are hedged, qualified -- leaving
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
W
-2-
great discretion to implementing officials. The United
States' experience witn lower-level implementation ais-
cretion is not a happy one.
(2) Many of the measures have been previously agreed and an-
nounced. It is disingenuous to claim credit repeatedly.
(3) While implementation necessarily takes time, the schedule
in many respects is too slow. We have a trade crisis.
The timing should reflect the urgency of the situation.
(4) Many specific U.S. requests were left out or not met
fully:
o Forest products:
oo To bring our MOSS forestry talks to a successful
conclusion requires a commitment on the part of
Japan to reduce, and then eliminate, all tariffs on
wood and paper products.
'oo We want the GOJ to begin reducing the tariffs on
wood products no later than April 1, 1986.
00 44e do not accept the principle of linking tariff
reductions on wood products to the successful
implementation of Japan's programs to restructure
the Japanese forest products industry.
o Tariff levels on the following are also unsatisfactory:
0o
paper
oo
tree
nuts
oo
fresh
grapefruit,
0o
wine,
and
0o
chocolate confectionery.
In short, the program is only a partial response to the traae
frictions whicn both countries face. Therefore, more neeus to to
done. We suggest:
(1) Action Program must be implemented expeditiously, in joou
faith, with energy. U.S. and GOJ officials shoulu met_-t
regularly to review implementation.
(2) We must continue our broad efforts on traae, incluain7
MOSS talks, Sub-Cabinet, etc., until:
o Japan's imports of manufactures begin to increase
steadily; and
o U.S. businesses report they nave access to Japan cor.~-
parable to Japanese access to the U.S. market.
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
(3) we must address issues covered only generally in the Ac-
tion Program, including distribution problems and
commercial practices, such as purchasing patterns of
industrial groups and legislation affecting retail
stores.
(4) In considering policies to stimulate domestic demand, the
Government of Japan should give preference to those that
increase imports and that change the structure of demand
to reduce the current account surplus.
(5) We should concentrate on internal barriers to imports,
including institutional and legal barriers.
(6) "Visions"*:
o We must also deal with the understandable skepticism of
the American audience.
o A "Vision for Imports" could accomplish two key objec-
tives:
oo indicate to the American public that Japan is
changing, and
0o bring about structural changes needed to increase
the role of imports in Japan's economy.
Specific Comments
Increased Domestic Demand
-- The USG is glad to see specific recognition in the Action
Program that Japanese domestic aemand needs strengthening.
-- Prime Minister Nakasone's specific reference to stimula-
ting demand in his statement accompanying the release of
the program was particularly encouraging.
We agree that the establishment of a Special Working Group
to plan and promote this effort is helpful. We understand
it will review, in part, deregulation, the five-day work
week, private sector vitality, and the tax system.
We look forward to the speedy completion of the Work
Group's study.
-- The Japanese Government has taken a poitive step in
announcing that it intends to eliminate tariffs on 37
items and reduce tariffs by about 20 percent on more than
1800 items.
* A "Vision' s the mechanism by which the GOJ sets industrial
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4 -
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
-4-
WJe are deeply disappointed, nowever, that some of the U.S.
Government's top priority items were not included, despite
our repeated requests. These incluae such items as wood
products, chocolate confectionery and fresh grapefruit.
We are furthermore disappointed that the tariff reductions
on certain other items, such as paper products, tree nuts,
and wine, are to be much smaller than we had sought. In
addition, some of these cuts are to be implemented from
April 1987, a full year later than we had expected.
We note two new tariff measures included in the July
Action Program that were not in the June tariff announce-
ment:
o We are encouraged by the "priority" given to negotia-
tions aimed at eliminating computer parts tariffs based
on a "trade volume" rather than a "product-by-proauct"
approach.
o Although the Japanese Government now firmly commits to
reduce tariffs on plywood and other panel products, the
Action Program did not meet the U.S. request for tariff
reductions on specific wood and paper products beginning
April 1, 1986, with complete elimination of tariffs (as
in the United States) by April 1, 1987.
Import Quotas
-- This section is particularly disappointing. The U.S. ob-
jective is still the elimination of quotas, and we believe
this issue should be given priority attention.
Standards and Certifications, and Import Procedures
-- The U.S. Government is encouraged by the commitment to
open further the Japan Industrial Standards and Japan
Agricultural Standards systems through greater use of U.S.
testing bodies.
-- We note that the Japanese Government reaffirms coirunitments
made during the bilateral MOSS talks. We will be monitor-
ing the implementation of these commitments, and measuring
their impact on actual increased sales.
The U.S. Government welcomes the Japanese Government's
commitment to permit representatives of foreign interests
to participate in deliberative councils that set industry
standards. To ensure the meaningful transparency of indi-
vidual councils' procedures, the Japanese Government
should approve only those council procedures that allow
for public notice of proposed standards, a reasonable com-
ment period and a full exchange of views between represen-
tatives of foreign-owned companies and members of the de-
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
-- We are disappointed that the Action Program does not re-
spond to our frequent request for industry self-certifica-
tion of automobile standards.
-- The U.S. Government is pleased that the Action Program
contains provisions that, when implemented, could benefit
U.S. producers and Japanese consumers of cosmetics, pro-
cessed foods and electrical appliances.
Government Procurement
-- We are pleased that initiatives on government procurement
were included in the Action Program. We hope the procure-
ment changes will be comprehensive and that we will soon
see an increase in foreign purchases.
We believe that it is important for the Japanese Govern-
ment to set an example for local purchasing entities and
pr1vate firms through a liberal government procurement
policy.
We do have some questions and reservations:
o With respect to uniform qualification procedures, all
agencies must be aware of guidelines.
o The statements on single tendering are vague. More de-
tails are needed. What are the specific steps each of
the ministries will take?
o The extension of bid deadlines to 40 days is good.
However, in the past, in many cases the 30-day deadline
was not adhered to.
o How will you publish information on winning bids?
o we have not completed our analysis of the impact of ex-
tending GATT Code coverage to new Japanese Government
entities.
-- We welcome the reporting system identified in the program.
In October, when the ministries apply the system "in prin-
ciple," we will closely monitor the system.
Financial and Capital Markets
We welcome the financial measures included in the Action
Program and the continued progress they represent in
Japan's effort to open its financial markets and interna-
tionalize the yen.
The steps identified in the program are broadly represen-
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
 Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4
w V
tative of the kinds of issues discussed under the yen/dol-
lar talks.
-- We particularly agree with the neea for liberalization of
domestic interest rates and development of the short-term
money market in Japan. We hope Japan will press anead
with implementation in these key areas as rapidly as
possible.
-- Other measures in the program will help achieve our other
broad goals of further internationalizing the yen and im-
proving the access of foreign financial institutions to
the Japanese market.
Services and Import Promotion Measures
-- The Prime Minister's renewed call on his country to pur-
chase more imports is welcome, as well as the follow-up
promotion measures.
-- We are very interested in the planned study of the Japa-
nese distribution system. During the drafting process,
the study should be open for foreign input and ideas.
-- We hope it will deal forthrightly with even difficult
issues such as restrictions on the establishment of large
retail stores and procurement practices among members of
keiretsu groups. Previous Japanese Government studies of
these subjects have tended to underestimate barriers to
foreign market entry.
-- The statement on foreign legal: consultants raises more
questions than it answers. For instance, questions of who
will draft the amendment to the Lawyer's Law, who will
regulate the foreign legal consultants, and what will be
their permitted scope of activity all remain unanswered.
We would welcome an early resolution of this issue con-
sistent-with the U.S. Government proposal of April 1H65.
-- We were disappointed that Japan did not create new uuii-
ness opportunities for U.S. insurance companies. National
treatment does not provide market access if new companies
are not allowed to compete in the market for existing ser-
vices.
Sanitized Copy Approved for Release 2010/07/26: CIA-RDP87T00759R000200200019-4