JPRS ID: 10492 JAPAN REPORT

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500060005-5
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 47
• Document Creation Date: November 1, 2016
• Sequence Number: 5
• Content Type: REPORTS

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JPRS L/ 10492
5 May 1982
Ja an Re ort ~
p p
CFOUO 27/82)
Fg~$ FOREIGN BROADCAST INFORMATI~N SERVICE
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JPRS L/10492
5 May 1982
. JAPAN REPORT
- (~'OUO 27/82~
CONTENTS
ECO;~OMIC
Trade Fricti~n With United States Analyzed
(NIHON KOGYO SHIMBUN, various dates) 1
SCIENCF. AND TECHNOLOGY
Technology Cooperation With U.S. To Be Strengthened
~ (NIHON KEIZAI SHIMAUN, 30 Mar 82) 18
MITI Approves U.S, Participation in 5th Generation Computers
(NIKKEX SANGYO SHIMBLIN, 6 Apr 82) 20
~
Tariff Rate o n Computers Lowered to 4.~.~ Percent
(NIHOTI KEIZAI SHIMBUN, 9 Apr 82~ 22
Friction With USSR Over Communications Satellite Noted
(YOMIURI SHIMBUN, 9 Apr 82) 25
Translation System To Be Established, 'Dictionary' Promoted
(NIHON KOGYO SHIMBUN, 31 Ma.r 82) 26
Communi~~ation Committee To Cope With Uitra-Modern Technology
- INIHON KOGYO SHIMBiJN, 13 Apr 82) 2$
Revision, Abo lishment of 355 Laws Approved
(NIHON KEIZAI SHIMBUN, 19 Mar 82) 30
MITI, Postal Service Head for 'Second Rou:~d' Over Communications
(MAINICHI SHIMBUN, 20 Mar $2) 36
. Industry Starts Preparations for Data Communications Role
fNIHON KRIZAI SHIMBUN, 20 Mar 82) 39
Further Discu ssions on Data Communications Urged
(YOMIURI SHIMBUN, 24 Mar 82) 42
- a - [IIT - ASIA - 111 FOUO]
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HUR U~HI('IAI. USE UNLY
ECONOMIC
TRAD~ FRICTION WITH UNITED STATES ANALYZED
Tokyo NIHON KOGYO SHIMBUN in Japanese 9, 10, 12, 17, 18,. 19 FQb 82
[9 Feb 92 p 1]
[Text] Rebuilding UoS,-Japan Relations: Effort To Promote Imports; Criticism
of Status Quo in Japan
A s Japan-UoS, trade friction escalate^. gover~ent officials and trading
companies are afraid that a Reagan shock may strike Japano The Reagan
administration is chafing under an $18-billion trade deficit with Japan and
a growing domestic unemployment problE:m. They believe that he may unilaterally
enact stiff sanctions against Japan such as import restrictions or import
surcharges. The UoS, Congress has repeatedly proposed reciprocity bills,
which may be taken as a forewarning of some such action, and a movement to
' seal off Japan in emergingo Also, the effects of the expanded military budget
aiming at a strong America cannot be overlooked. The EC (European Community)
also began studying anti-Japanese measures on the lOth of the month. Depending
on how the situation develops, Japan may drop out of GATT (General Agreement
on Tariff and Trade) temporarily because of a boycott on Japan. Furthermore,
the recent demands on Japan related to trade friction are for opening up to
service~ as well as conventional goods, and they are spreading to domestic
economic policies and defense issues. The Japanese response has become cor-
respondingly difficult. The difficult must be overcome one way or another
in order to ~aintain national security and the smooth working of the free
economy of the West.
Masumi Ezaki, chairman of tne LDP International Economic Measures Special
Study Committee, will visit the United States on the 21st to talk with
President Reagan, explain the policies for opening ttre Japanese market,
and seek understanding. Chairman Ezaki is actually the chief person res-
ponsible for enacting measur.es for improv3.ng 647 non-tariff barriers (NTB)
previously determined by the government. Since this visit will occur during
' the rush for a reciprocity bill, he is likely to meet with rather harsh
cricicism. However, Chairman Ezaki is taking the stance: "In order to build
a new Japan-UoS. relationship, I will state clearly what needs to be said."
He will advance directly on the White House and attempt to make this visit
to the United States a starting point for a substant3.a1 Japanese liberalization
policy.
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[Interview with Chairman Masumi Ezaki of the LDP International Economic
Measures Special Study Committee; questions by reported Eitatsu Furudate]
Tariff Levels the Lowes t in the World
[Question] First what is your own view, Mr Chairman, on the 1~'TB improvement ,
measures?
Fsaki: The study committee spent about 80 hours examin~.ng this problem in ;
parallel. with Iast yea r's budget formulation, As a resulC, while consulting
with Chairman Xamanaka of the Tax System Study CoBanittee and obtai:zing full
cooperation, we decided to move up the multilatexal tr.ad~ negotiations
decided on dFiring the Tokyo Round of trade talks by 2 years. In other words,
we decided to take ear ly ac.*.ion on all 1,653 items. Not only would this have
an effect of reducing the 3eficit by 40 to 4S billion yen, but it would make
Japanos average tariff rate 4.,9 percent, the lowest in the world. This was
decided on as the firs t stepo
Also, with respect to improvement of i.mport inspection procedures, there are
51 i~ems which have be en under study by our committee since its inceptiona
_ iJltimatel.y, this was expanded to 99 itemso This shows in reverse how overly
troublesome the import inspection procedures have been. This process has
exposed some h~aphazard aspects in the procedures of government off-ices. I
believe we have achieved substantial results.
Sweeping Away Forei~n Criticism With OTO
[Question] However, a conr_inual inundation of demanda for i.mprovement can
be expec*ed from tt:e UniCed States and Europeo
rsaki: Certainly, just as the 51 de~nands grew to 99, we can expect the number
of specific demands to easily reach 120 or 130, Therefore, we decided to create
an Office of Trade Ombudsman (~TO) with a complaint processing role, directly
under the prime ministar's office, as an organ for comprehensive government
response to the opening of the marketo By this means we can make a quick,
~o~n~rehensive response to pr~blems that involve more than one ministry or to
new probl~ms and avoid the regetition of criticism by foreign countries that
we always say that we will "take positive measures" but never actually respond.
This is especially important in our approach to foreign countries.
[Question] There are some who claim that this will be "making an image of
Buddha without putting in the spirita"
Ezaki: In a vertically organiz~d government administration, it is necessary
to have a followup study to see if a certain thing has actually been done.
The study committee is prepared to makz such a study and do everything it can
to follow up. If this approach really works, I believe it can become an inter-
national matter, as p o~.nted out by the U.D. Minister in Japan, Barraclough,
This is a very important aspect of, avoiding friction.
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~eciprocity a Principle of "Equality"
[QuestionJ However, it is q uestionable whether the trade imbalance with the
United States and Europe will be eliminated or whether trade friction can
be avoided through these measures alone.
Ezaki: Certainly, I do not think this alor.e will make the problem go away,
However, we have simplified our import procedures so that they are similar
to those of the United States. If ihere is a further demand to make the
procedures similar to those of the EC, we are prepared to discuss it and d o
something about it. And, as you mentioned, we have created a policy of
beginning construrti~n on 1.3 billion units of housing and are making repeated
efforts to promote product imports to expand domestic demand. Therefore, we
hope that the United States and Europe and the developing countries w3.11 make
a greater effort to export to Japan. We would like the bu~iness leaders of the
United States and Europe to make a renewed effort to pramote this within their
countries.
~
[QuestionJ However, whatever the situation is in Euroge, the United States
is facing offyear elections. Even if there is a theoretical understanding,
there is a rising mood of protectionism and some danger of retaliatory measures
against Japan in the name of reciprocity. In other words, there could be a
"Reagan shock" worse than tne "Nixon shocke"
Ezakl: There is a lot of discussion of "reciprocity." We understand reciproci-
ty to be a principle of equality, the carrying on of trade according to the
same rules. To espouse volume restrictions and protectionism under the name
of reciprocity would throw the world economy into confusion and would lead
to trouble even in the limited case of the United States and Japano Japan is
purchasing a large volume of agricultural products such as wheat from the
United States and exporting almost no agricultural products to that country,
The important thing is for the country which has a certain pxoduct to export
- it to the country that does not, to the place with the greatest need.
However, Japan cannot prosper unless the United States prospers. This is a
fundamental principle. Furthermcare, the number of unemployed in the United
States has reached almost 10 million, the greatest number since the great
depression of the 1930's. We must take this very seriously. The same goes
for the EC. This i.s not a simple situation.
- [Question] What measures can Japan take for this?
~ Ezaki: It is necessary for us to cooperate wherever possible. In particular,
our ii~dustrial sector, indee3 each company, must think of this as a"second
- opening of the country" and work actively to place its facilities in the
United States and other countries and promote technological assistanceo Also,
we must sincerely proceed to simplify the complicated domestic distribution
syst-em which has been criticized by the UoS~ auto industry; promote the
application of data from U.S. testing organs, and make a positive study of the
27 items which still come under import restrictions.
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rou c~rNic�in~. u~~~: ~Ni.v
~ Invite American Opinion Leaders
[Question] Then what will you appeal for in your upcoming visit to the
TJnited States?
Ezaki.: It would be impudent to offer the secrets of Japanese success or ask
the United States ~o learn from us in the area of productivityo However, one
of the motive forces of Japanese progress is the quality of its managers. Any-
one c4n become pres~.dent of a company regardless of his background. I would
like to have them understand these differences in Japanese culture and society.
Also, I wouZd Iike to extend a sincere invitation to America's opinion leaders
to come to Japan to sPe and hear these things.
_ An other big pr oblem between the United States and Japan is that we are not
unified by a network of roads as is the EC.. That is r.~t all. It is said that
there is a lack of reciprocity in our treatment of UoS. financial and service
organi~ations. The Japanese have traditionally had a strong attachment to
st~cks and not been inclined to let them out. This has given rise to the mis-
under~tanding that we are closed and isolationist. Also, there are some
items that are restricted T~ahen there is danger of a substantiaL adverse
efFect on the 3apanese economy. I would li ke to explain these special
problems, includir:g our Achilles heel--oil. If something happened one day
in the Middle East, the prosperity of the Japanese economy could crumble.
[Question] Finally, I believe there is a good possibility that during your
visit on the trade friction problem the United States will make demands which
include a sharing of the defense burden.
Ezaki: I ~aill tr.eat defense and trade as two separate problems. To bring these
two pronlems Logether would make the solution of problems between the United
States and Japan much more complicated. However, I also understand something
a.bout thA defense problem, so I will listen carefully and explain in detail
how Japa.z is making an effort. I think new demands will be made for opening
the market, and I intend to explain clearly what we can and cannot do. The
promot~on of diplomacy direc~-ed toward men~bers of congress concerned with
tliese matcers will also be necessary.
[10 Feb 82 p 1)
[Article by reported Norio Konuma]
[Text] Second Move: Abolishment of NTB; Cooperation in Advanced Technology
Before Paris Summit
Painful A;aareness of Weak Foundations of Japanese Economy
"Can't we have a third oil shock?" This remark has frequently been heard in
MITI recently, and it is hard to tell whether it is a joke or a serious wish.
If ar. oil shock came, there would be an immediate trade deficit. This would
get rid of t;ie trade friction that is becoming such a headache for MITI.
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Indeed, during the two previous oil shocks, the balance of international pay-
ments went into the red, and the U.So and European criticism of Japan somehow
disappeared. If the same thing happened again, things would " work out well."
_ This approach is like "waiting for a divine wind."
Of course, there would be seri ous trouble if this longed-for oil shock came.
So the present situation is causing a great deal of irritation. What MITI
is really trying to say is: "The f oundations of th e Japanese economy are
weak." Japan is the only c a�ntry that is continuing to grow successfully .
while the Uo~o and European economies remain in a slump, so it is the object of
envy and complaints. However, MITI is saying: "It is not really true." MITI
is afraid that witti a little Pressure from the outside, "it could easily
crarnble."
Minister of International Trade and Industry Abe presented a position of
"maa.ntaining freedom of trade" and pro~ested reciprocity at the tripartite
trade conferenc e at Key Biscayne, Florida on 15 and 16 January and in a series
of talks with U.S~ Government and busi.::ass leaders. But he has also advocated
. somethino else in a quiet way. That is: "The United States and Europe argue
strongly that their economies are in recession and unemploymeiit has increaseil.
But no country has as great a financial burden as Japan. ~apan is pressed by
the debt created by many years of deficit financing. The internal situation
is not as goo3 as the United States and Europe may think." This statement
implies that the foundations of the Japanese economy are weak, not at all
stro:ig, and that future policies are restricted. If invisible unemployment
is considered, unemployment is growing in Japan, even if it is not yet as bad
as in Europe and the United States. If the free trade system breaks down, there
is a latent fear that a c:ountry like Japan which depends on trade will run
into L�rouble.
Certainly, some processed goods like automobiles, color television sets,
n~achine tocls, and semiconductors are strong enough to cause trade friction
~aith f~reign count-ries. However, other basic industrial sectors such as
aluminum and petrochemicals are under attack from overseas. TYiey are like
a candle f.lame in the wind, and there are many problems.
A~aoiding Repercussions Over Semiconductors
With the px~esent petroleum situation, there wi,ll not be another oil shock
soon. But if there is a shock brought on by t:~e United States unilaterally
imposing sanctions on Jap~n such as import surcharges or restrictions, the
Japanese economy will soon come to a standstill. This awareness "is driving
MITI to take active measures to open the market, even though it believes that
the reciprocity bill now being presented in the U.S. congress "will not pass"
(Makoto Kuroda, assistant director of MITI's Interna.tional Trade Policy Bureau).
7'hP policy is to "reduce the number of remaining items with import restrictions
and expand the boundaries" (Minister of International Trade and Industry Abe).
Wh~dtever form the policy takes, MTTI wants to avoid a"Reagan shock" one way
or another.
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So what is to be done? M~TI is aware that the previously formulated policy
to eliminate non-tariff barriers (NTB), mainly by simplifying and improving
import procedures, is not enough. Therefore, MITI believes it is necessary
to introduce a second NTB elimination proposal wi~h the objective of reducing
the items still under import restrictions, such as agricultural products,
and open up the market to financial and trust services before the Paris
summit in June. The MITI leadership thinks that "~3merica is concentrating on
one thing, ope:ling up the market." Therefore, if it does not make some sort
of response, there is the danger that ~merica will rush to take protectionist
measures.
HoweveX, most of these proposals actually come under the jurisdiction of other
ministries and agencies. Therefore, MITI is determined to set an example
and push hard for opening of the market, wo.rking to expand the boundaries
of imports" for items like leather goods which are more of a political than
an economic pro'olem.
With respect to separate categories which come under MITI's jurisdiction such
as automobiles and machine tools, MITI is taking a strong surface stance for
the second year. Vice Minister Ichiro Fujiwara says: "Automobiles will be
handled according to the rules." According to Kaku Toshima, director of the
Machinery and Information Industries Bureau: "Fundamentally, the number of
vehicles will be 1.68 million plus alpha." Actually, However, MITI intends
to be flexible in negotiations. 11A reduction is impossible." "This will be
a means of softening U~S,-Japan negotiations."
- However, what worries MTTI is the possibility that, in the name of reciprocity,
high technolog~ such as that seea in semiconductors may meet the same fate
as automobiles. Even if problematic items like communications equipment were
added, says Kengo Ishii, assistant director of the Machinery and Information
Industries Bureau, it would not be a big problem because "the amount of money
involved is small ccmpared t~ automobiles." However, it is a matter of conc:ern.
Do Not Give an Excuse for Reciprocity
For this reason, MITI is working on the various sectors to open the ma.rket as
much as possible and not give the United States an excuse for implementing
reciprocity measures. TYiis touches on MITI's true feelings of irritation at
the prospect of having e~port restrictions put on items unde.r its Jurisdiction
such as automobiles, semiconductors, and coimnunications equipment because of
progosals by the other ministries--the Ministry of Finance, the Ministry of
Agriculture, Forestry, and Fishery, the Ministry of Health and Welfare, and the
- Ministry of Transportation--whicin are criticized by the United States.
MITI believes it shou'Ld activPiy promote positive policies and positions for
industrial cooperation in advanced technological fields, which are being
- requested by the United States and Europe, as an aid to eliminating trade
friction. Shohei Jurihara, a trade official, says: "This is fundamentally
a matter for the pri.vate sector, but ~ae will make every effort to cooperate
on the part of the government."
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!~'()k ()HTi('(:1i. liti[; f)?ti~.~' .
"The.United States says that it is in difficult circumstances. However,
Japan has been forr.ed to l.ool~: too r,;uch at the northern and eastern areas,
especially Detroit. 'L'here is atso a strong part of America, in the West and
the S outh, producing agricultural products and electronics products." MITI
- officials are feeling the pressure fram Amerir.,a directly. "For some reason,
a cold wi~1d has been blou~ing frcr,n America since the beginning of March. EvOn
though it is spring, i.t teels Ii'~ce we are goind back to winter." Will Japan
prosper as a countr.y built on the foundation of trade with a balanced expansion
according to *~iI'TI's plans? Or will the world take the path of protectionism
and contraction. This will be decided by Japan itself as it endeavors to open
its marlcets.
[1.2 Feb 82 p 2]
[Article by reporter Tsuy~ski Kikuchi]
[TextJ Technology and Services: General Trading Companies MQVe Away F.rom
Emphasis on Tangible Goods; Promotion of Comprehensive Industrial Cooperation
Taking titie "Vanguard" Role in Fliminating Friction
According to Seiki Tozaki, president of C. Itoh and Co, "We have entered an
era of campound political and economic crisis," Ever. since the UoS�-Japan
fiber negotiations, trade friction has been r.ontinuously exacerbated by
polirics.
Economic stagnation ~135 brought about high unemployment. The stagnation
of regional industry has become more of a problem pol.itically. As a result,
some leaders of large cornpanies have begun to ask: "Why is Japan the only
country that has to mo~~e up the implementation of the Tokyo Round tariff
reductions? This does not agree with diplamatic commonsense."
On the other hand, most observers b2l.ieve that the [~merican actions have been
very reasonableo "Japan is starting from zezo, r,tit .America is starting from
l0U percent" (Tomen consultant `loshitomi Ishimariz). Th:ere is a big difference
between America implementing import restrictions toith a tiackground of 100
percent liUeralization and Japan malcing small corzcesssions after Y,aving no
achievemen~s in this area. Therefore, sc.~me tliitxk that the main prc?~lem is how
much restr.ic~ion exists in comparisori to 100-percetit liberalization rather than
hn~,~ many items are restricted. This view l~olds tha~ bePore America became
political, Japan was even more political. Japan~s poli.tical "lack box,"
represented especially by faxm producrs, has made the trade problem more
complicated.
As exemplified in Mi.nister of Finance Watanabe's statement ab~ut "carousing,"
the trading companies are usually thought of as the "vanguard of trade." When
it comes to the ~rade friction problem, they are at the forefront of the effort
to open the market. Behind this is a reaction to the idea that the trading
companies are inherently evil. "The friction has been caused by auto and
electrical equipment makers. The trading companies are actually helping to
eliminate friction."
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The nine largest trading companizs have a 56-percent share of Japan`s total
imports, but only 48.7 percent of the exports (in 1980). For six trading
companies, imports exceeded exports. Mitsui USA is ranked fourth among
U~S~ exporters (with $3.8 billion in 1980), coming'behind Boeing and GM.
Because its exports exceed imports by $2 billion, it claims: "We are
contributing to improvement of the U.S, trade balance."
A New Viewpoint on Liberalization of Farm Products �
Trading campany business has slowed down as much as that of domestic basic
industries, so d ifficulties are increas tng. Even if the UoSo demands are met,
imports from the United States will reach only $1 billion, jus t a drop in the
bucket for eliminating friction. The ripple effects of increased distribution
volume are great, and it would be betcer for business not to have these
accusations.
Yohei Mi~sumura, president of Mitsubishi Corporation, says: Why not lib-
eralize the import of beef and oranges? Compensation for the d omestic
problems could be considered separately." Sachio Shibayama, president of
_ Sumitomo Shoji, says: "The remaining items under import restriction should
all be liberalized. An import tax could be established, and these funds could
be used to carry out domestic measures. Seiko Kojima, senior executive
managing director of Marubeni, says: "It is only natural that nontariff
barriers (NTB) should be modified, but this wi11 not automatic ally restore
rhe trade imbalance."
- Minister of Agriculture and Forestry Tazawa xs keeing up a stiff defense
agai~t liberalization of farm products: "Any more is impo~sib le." Increasing
self-sufficiency is a problem related to national security. However, Hiromune
Minakawa, executive managing director of Mitsubishi Corporation, is optimistic:
"It is a m$stalce to think that secur3.ty is possible with self-sufficiency in
food. Things should be arranged so that Che countries exporting farm products
to Japan will be in trouble if anything goes wrong in Japan." Koj ima also
says: "There are some ~ectors such as lives tock which have grown on the basis
of feed imports. There are li.mitations to increasing self-sufficiency." He
emphasizes that close economic relati.ons can aid 3n easing conflictso
However, since exports to America are industrial products and imports are
primary products like wheat, feed, and coal, the UoS.-Japan trade structure
will always resolve itself into a pattern whereby Japan en~oys.a favorable
balance of trade under ordi.nary rates of economic growth. Ultimately, the
United States will try to reach into service fields as well as cott~erical
product trade. But servi.ce fields grow out o� each country's historical and
cultural backgrounds. Therefore, simple comparisons are diff icult and the
Japanese response inevitably becomes more difficult.
Policies To Create a Strong Yen and Solve Fundamental Problems
Even though exports were slowing down w3.th the yen exchange rate at last year's
high level, as a result of a drop in the yen rate, an exporL d rive is getting
underway again. There is a fundamental problem with economic oolicies which
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depend on exports. If ineasures are not taken to inducz a high yen rate in
~arallel with the liberalization of imports, the problem will not be solved.
S~nQ of the large trading companies are saying that the series of reductions
in the interest rate havE led to an increase of friction, and they are begin-
ning to ca11 for the implementation of "operation twist." This is a policy
opposite to that used in ordinary times. It is a policy for creating low
long-term inzerest rates and h~.gh short-term interc:st rates. The Kennedy
administration used it successfully in parallel with tax reduction palicy.
This will probably end up only in increased direct intervention in the exchange
market. The pound rate wi11 remain high because of the North Sea oil fields.
This has the ironic result of weak~ning international campetitiveness, and
the U.S. high interest policy leads to a strong dollar. However, Japanese
f oreign exchange policy has an undeniably large effect on the presenC trade
~ friction.
Another problem i~ that Taiwan and Korea are catching up with Japan, There
is a boomerang effect, and the large trading companies are beginning to get
involved while at the same time trying not to offend Japanese steel makers.
^the trading companies are also under pressure to use a diver$ified appr~ach.
According to Shunji Ueda, president of Nichimen Co, Ltd: '.:Japan cannot survive
without buying things from foreign countries. H awever, it must not only deal
in products but must also carry out "comprehensive industrial cooperation"
involving technology and services as :~ell in order to solve the trade friction
problem. This is where the trading companies must get into the act."
Previous imports of primary goods have been descri.bed as the wreckage resulting
fram Japanese employment policies. 7.'he liberalization of farm product exports
is more oP a domestic problem rooted in our country's political base than it
is a problem of U.S. political pressure.
[ 17 Feb 82 p 1]
[ArCicle by �repnrr.er Katsuhiko Tomioka]
j'Cext] Cl~.r~.fication of items of Pre:~er~ritial Treatment: Time Required for
Unde.rstanding of System: "Discrimination" Against Foreign Banks a Misunder-
s tanding
Dissatisfaction Over Bank Administration and the Financial System
As Japan-U.S. trade friction increases, the debate on Che isolationism of
Japanese financial services has rapidly become a focus of concern. U.S.
Ambassador Mansfield clearly expressed dissatisfaction with reference to this
problem in January: "Japanese banlcs are buying American banks, but American
banks are not allowed to buy .Tapanese banks."
America is asking for reciprocity, and this inequality in the area of financial
services, or rather, this discrimination against American banks, is difficult
to bear. Correction of this situation is becoming a key point in improvement
of Japan-U.S. trade relations.
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ie~ us analyz2 w'nu~t t~I1P UniL-ed Si:ates means by discrimination against foreign
ba~ks. Tne dissar.a.s~ac-~zon of the Utzited States can be divided into complaints
against the banic administration of the Ministry of Finance and complaints against
the Japanese fznancial sys~ecn itselfo Items related ta the formereategvey are the
regulations governing estau:List?ment of banks, limitations on activities for
obtaining deposirs, and in~ome regulations on Japanese financial institutione.
Problems under the latter category are the prohibition of bank debenture issues
an~ limitations on consumer credit business.
If the U,Se accvsatioris a-re correct and these types of restrictions on foreign
banks exist, ~ae must admit that this is indeed 1�discrimination."
What is the real situation? First, let us examine the rebuttal given to the
LDP International ~conomic Measures Special Committee by the Ministry of
Finance under the orders of r~.nance Minister Watanabe on 12 February.
"Establishmenr and expansion of branches o� foreign banks are allowed as long
as a necessary minimum of soundness is maintained. There is no discrimination
_ between this and the establishment of branches of Japanese banks. The
solicitati.on of deposits from individuals by foreign banks is completely free."
"The puzchase of Japanese banks by foreign banks is possible in principle.
= I-Iowever, thi.s requires agreement between the parties as a prior condition.
Also, if a financial institution holds more than 5 percent of the stock, the �
approval of the I'air Trade Commission is necessary under the Antimonopoly Law.
- However, this is not some~hing that is only applind to fore3.gn banks."
JapanesE banks go along ~oith the Ministry of Finance i.n saying that the com-
- plaint aboat the prohibition of bank debenture issues and the limitation on
consumer credit activities is nonsense. The issuing of bank debentures is also
impossiUle for Japanese banks, with some exceptions such as the Bank of Tokyo,
and not just for foreign banks. "This is a difference in the system, not dis-
- crimination," according to the Iitternational Division of Su.mitomo Bank.
The same source says this about ~he limitations on consumer credit business:
"Japanese banl;s are actually placed under stiffer restrictions. Foreign
bauks are free. Indeed, a number of consumer finance companies have emerged
un3er the r~ame of banks. Tn a sense, you could say that domestic banks are
being discriminated against."
Actually No Advantage in Purcha~in; Banks?
I taould l_ike to narrow the discussion down ~o the "purchase of Japanese banks
- by forei;n banks" spoken of ~y Ambassador Mansfield and analyze this issue
carefully. ~Lr is a fact that Japanese city banks have purchased U,S, banks
, in such places as California, and it is also true that there is no opposite
example of U.S. banks buying Japanese banlcs. However, this is not because they
want to buy a Japanese bank and cannot. It appears tnat, in reality, they
have not bought any Japanese bank because there is n~ advantage in doing so.
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"Japanese banks are forced to operate at a low rate ot profit under the
eupheniisim of `social mission.' Could the hoped-for results be achieved by
buying such institutions?" These words of an influenti~al American bank
executive seem to back up this idea. FurtheYtnore, there is r.o example in the
past of a foreign bank making an offer to bu~ a Japanese bank.
If we ask for the real opinion of foreign banks, the response varies. At
the same time they are generally sensitive about the discrimination problem.
Several influentual foreign banks have said: "No co~ent." One branch manager
i made the following statement on the conciiti.on that the tiame of the bank not
; be revealed, whether in deference to Ministry of Finance of�icials or to
' "middlemen." "I do not thinlc there is discrir.iination. They think that
; because they have not carefully studied the .Tapanese situation. Mosst of the
responsibility is theirs."
However, the majority seem to believe that "there i.s sti?1 some unfairness."
"Whether there i.s unfairness or lio~ depends on how it is interpreted. If the
problem is national treatment, there is no unfairness now, in spite of what the
past si.tuation might have be~n. Hocaever, if we ?.ook at the issue of the system
itself, this is not necessaily true. Japanese banks receive preferential
treatment in the Un~.ted Stares because they are foreign banks. For example,
because their head office is in a foreign country, they can establish a place
pf business I.n any state. In Japan their are so such areas of prefer~ntial
tre~tment for foreign ba;xks" (Bankers Trust).
Differences Between the United States and Jagan in the Degree of Freedom in
Operations
"It is not discriminati~~n, but I find a dj.fference between Japan and the
United States in the degree of freedom in banking operations. Japan's
financial system is overly complicated and it obstructs free economic activities.
Especially with respect to fund procurement methods, the diversification used
by Japanese banks in the United States should be made possible here" (Chase
Manhattan Eank).
From the views of L-hese banks, we see that the differences betcaeen the
financial systems in Japan and the United States give rise to a"perception
of unfairness," and the most extreme people a.nterpret this as "discrimination."
If this is the case, the "various for ms ordi.scrimination" toward foreign banks
- cl.aimed by the United States cannot be den9.ed out of hand. There are
qualititive differences, but if the position of both countries is clearly
communicated, it is not a problem that is impossible to overcome.
The Ministry ot Finance seems to have understood this bel.atedly. It says
that it will make clear the areas of preferential treatment taward foreign
banks which the United States di3 uot kncw of or was not inf ormed of, such
as the exemption from Bank of Japan "wir~dow guidance" or the exemption from
the obligation to accept nar.ional bond issues, in order to clear up U.S.
misunderstanding.
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Because there are differences in fur.damental awareness or philosophy with res-
pect to the system, the attempt to create understanding will take sometime.
Ho~aever, such a dialogue should lead to definite results. Although it is
a rather commonplace conclusion, I believe that patient effort is the key to
improvement of this situation.
[18 Feb 82 p 1~
- [Article by reporter Tetsunosuke Hirose]
[TextJ Era of Compound Crisis: Isolationism Casts a Shadow; Getting Away
From Dependence on the United States; Economic Relations To Be Diversified
_ Progressing ta Social and Cultural Friction
"Three Japanese businessmen purchased the management rights of the Haworth
Country Club in Bergen County, New Jersey, and decided on a big hike in the
annual membership free from $300 to $5,500-$10,500. At first, this was met
with jokes like: "Are they planning to put a geisha in the locker room?"
However, the Japanese actually began to shut out Americans in practice, and
hatred of the Japanese grew among the members. It is terrible when Americans
are made into "second-class citizens."
This is just a small.article from a recent NEk' Y~JRK TIMES. However, the
papPr gave it the title "Japan-U.S. Golf Course Friction." The trade friction
which began with textiles, color television, and automobiles is now spreading
from general economic friction to social and cultural friction. Furthermore,
the economic friction was not brought about only be economic causes.
"Today, 40 years after Pearl Harbor, the United States has become a virtual
'economic colony of Japan.' Japan imports farm products and raw materials
from the United States and exports finished products such as cars and color
television sets to the United States. This is the classic form of a colonlal
relati.onship. Why has such a thing happened? It is because Japan has been
spared large outlays for defense" (~dASHINGTON POST).
Economic friction has roots in military and political problems and it gives
rise to further social and political problems. These various problems are
intricately entaiigled.
Ryuzo Seshima, a consultant to C. Itoh and Co, has frankly called thi.s situa-
tion "an era of compound crisis." He says: "If the trade friction is under-
stood only on the econcunic 1eve1, we will 1os~ our view of the whole. An
understanding on the political level is absolutely necessary." He has recently
been making an active contribution to foreign economic policy and admin-
istrative reform as a part of the "general staff of the financial sector"
and as a member of the Second Ad Hoc Council on Administrative Reform. Because
of hi;s experience as a part of the'~enera'1 staff," his politicaL and military
analysis of the world situation has a solid reputation.
When Seshima speaks of a"military analysis," he is referring to "the close
connection between trade and rlefense. This "trade and defense linkage theory"
~s not the exclusive property of Seshima. The relation between the two was
incisively analyzed in the report "America's Choice," put out by the Hoover
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Institute of the United States. The bill demanding an increase in Japanese
defense spending, sponsored in the U.S. Congress Yast fall by Congressman Neal,
arose from the same kind of thinking.
No Solurion Wirh Bilateral Reforms
Certainly there is a strong allergy to this linkage theory in Japan. If this
linkage becomes clear, there will be reactions such as "the business sector
is being sacrificed to defense" and "the opposition parties will not stand
for being drawn into more involvement in def.ense because of economic fr.iction."
And the government will not be able to move either way. However, as Seshima
points out, if we analyze trade friction only in economic terms, we will head
into a blind a11ey and noL be able to find a way out.
"The government and the LDP are working to improve non-tariff barriera and
open the market, and this ,probably has substantial psychological effectiveness.
However, in tenns of its e~fect in reforming the trade imbalance, it will only
reduce the trade surplus by a s~nall monetary amount" (Yoshihiro Inayama,
president of the Keidanren).
As long as the trade imbalance is not elimi~~ated, friction will not disappear.
No matter how hard Japan works to open its market, there will be no end to the
demands from the United States and Europe. The restrictions on auto exports
to the United States implemented under a 2-year agreement have been extended
to a th.ird year, end after autos, there is a strong campaign for new self-
imposed restrictions on electronics exports such as semiconductors. While it
is still uncertain w~ether improvement of non-tar~.ff barriers will be achieved,
the United States has dernanded liberalization of service trade. Furthermore,
there is the troublesome fact that "the trade a.mbalance cannot be corr~~^ted
bilaterally" (Inayama).
"The Americans are threatening to pass a'reciprocity bil?,' If they can do
it, let them try. Could it be passed in Congress? If such a situation occurs,
it will c:ause a big problem in the United States" (Sony Chai.zman Akio Morita).
This kind of "defi.ance11 or "hardline" attitude is comparitively common among
Japanese businessmen. This may be a kind of shock therapy for the United States,
but the problem is that even with this defiant attitude, it is necessar}~ to
look carefully not only at economic a.spects but also at the intentions of the
United States and the strategy of the Reagan administration.
~de can speak of defe~lse being entangled in the trade friction problem, but
the problem cannot Ue solved undPr the simple formula espoused up to now of
"either trade or defense."
Looking at Defense From the Viewpoint of Comprehensive Security
"On the basis'of tiiat dichotomy, if we expand defense spending to 1 percent of
the GNP as requested by the United States, Che trade friction should be
eliminated" (Shun Ishihara, president of Nissan Motor).
The follawing scenario of the Reagan strategy has been discussed recently.
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"Reagan is taking a hard line against the Soviet Union on the surface, but
- behind tb.e scenes, he is seeking to "shake hands" with the Soviets. A"new
Yalta system" has t~een constructed which gives tacit approva 1 to the situation
- in Poland. In other words, the objective is de.tente and world domination by
the United States and ~he Soviet Union. If this could be done, the United
States would not need to ma:ntain rhe alliance relatio~nship with Japan and
- the countries of the West. Z'Y~E~ Wes~ern alliance is more oE a burde�-. than
not for the United States, Thz United States will return to the old Monroe
~octrine (is4lationism)."
This scenario is just the tneory of one American expert in Tokyo. However,
there is plenty of corollary testimor.y to back it up. Sashima points out:
"The Poland problem is a product of the Yalta agre~ment." Ishihara says:
"The conflict between the United States and F~urnpe and the uncomfortable re-
lationship with Japan will force the United States to turn to isolationism
for its own advantage.'' Also; according .to the WASHINGTON P~JST: "Murmurs of
isolationism are heard throughout America. Critical glances are being cast
at our allies, West Germany and Japan. If West Germany and Japan do not do
what they are asked, all of their products should be shut out of the U.S,
market."
The Reagan administration is rebuilding a new Yalta structure and moving toward
- isolationism. According to the WALL STREET JOURNAL, the administration strar_egy
corresponds to the mood of the UoS. Congress. "Japan's dependence on Aznerica
for defense and its dependence on the American market should be eliminated."
The isolationism of the United States is casting a shadow on ~he trade
friction problem. This wi11 have the effect of increasing the pressure on
Japan ro expand its defense capability.
Japan is entering a period where it must work to build diversified economic
relationships and escape from dependence on America. At the same time,
according to Inayama, it rnust seriously consider "defense capability from the
viewpoint of Japan's own overall security."
[19 Feb 82 O1]
[Text] Substance of Problems Wittt the United States and Japan's Choice:
Economic Sector Consensus Should be Reflected in Government
The focus of concern in Japan-U,So relations has moved to politics as well as
economics. The results of a poll on "overall security taken among influential
business executives by the NIPPON KOGYO SHIMBiTN (on 1 January) demonstrated
that most executives think there is a threat of invasion of Japan by another
country." They also emphasize that "it is necessary co maintain friendly
relations with the United States and raise defense spending to 1 or 2 percent
of the GNP." However, because of financial difficulties an3 attacks from the
opposition parties, it is hard to increase the defense capabiiity, and the
. appr.oach to Japan-TI.S. relations tends to be restricted to trade problems.
Irritation and anger at this Japanese attitude is spreading in the United
States. We asked Assistant Professor Yahiro i;akagawa of Tsukuba University
to comment on the situation in the United States and our country's future
policy. Here are his remarks:
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Central Pic~lam Is Defense
The present serious problems in Japan-U.S, relations can be said to constitute
a crisis of catastrophic proportions. And the central problem is not economic
friction. It is the U.So anger (dissatisfaction is not the appropriate word)
directed at Japan over the issue of defex?se.
Japan is trying to placate the United States by working only on the U.S, trade
deficit c~ith Japan, and it is attempting to alleviate th.at by only abolishing
some non-tariff barriers.
However, the $18-billion U.S. trade deficit with Japan is not nearly as
serious as the defense problem. This was demonstrated by the contents of
President Reagan's budget message, which was announced early, on 6 February.
All Japanese newspapers as usual are fooling the people wi.th a sense of
vi~ctimization, saying that a share of the defense b~irden will be pushed on us.
Howeve.r, there is a danger, if Japan continues to refuse or fails to make an
appropriate response, that the anger of the ~Jnited States will result in
"economic retaliation against Japan" and "mxl.itary abandonment