Press Briefing by United States Trade Representative Mickey Kantor

The Briefing Room

3:33 P.M. EST

AMBASSADOR KANTOR: Let me begin by reiterating on behalf of the United States government what the President and Ambassador Mondale indicated in the last two days -- that we are deeply saddened at the tragic murder of two students in Los Angeles this past weekend, one a Japanese American and the other a Japanese citizen. Our hearts go out to their families. We deplore the continuing violence in our cities that have taken the lives of so many of our people.

The government of Japan issued a package of economic reform measures yesterday -- macroeconomics, sectoral and structural. We have reviewed these measures and they do not meet the concerns the President raised on February 11 during his meeting with Prime Minister Hosokawa. We agree with Japan's Chamber of Commerce, the Japanese Federation of Bankers, and the Japanese press, that the package of measures is of limited substance and appears to be halffinished work. There appears to be agreement in Japan that the plan does not present concrete steps toward resolving the issues raised by President Clinton.

We are not discouraged. The government of Japan has described this as a first step, and we see it as a work in progress. We had indicated that an enhanced package would be a necessary step to reopening discussions under the framework. This was not that package.

However, as the President has said, our door remains open. We will continue to work closely with Japan at the GATT and in APEC and on other economic issues. We also look forward to continuing close cooperation on security and strategic issues.

I'd be happy to take questions.

Q: Did the President express his views directly to the Prime Minister?

AMBASSADOR KANTOR: They spoke, and the President indicated, of course, that at that point we had not reviewed the package and that, of course, we would review it carefully and closely.

Q: How are you getting word back to Japan? And what -- does that mean, is the ball still in Japan's court to move forward?

AMBASSADOR KANTOR: I think the Japanese government itself has indicated that the ball remains in that court by saying this is just a first step. As I said, we're not discouraged. Our door remains open. However, I would only indicate that the Japanese press and business community seems to be united in believing that this step is not enough to reopen these talks.

Q: There was a speech at the Chamber of Commerce today by Assistant Secretary Len Moy* in which he suggested that the administration was looking at the possibility of selective MFN sanctions, only on state-owned industries, to try to hold harmless private enterprises and Taiwan and Hong Kong. Is there any way of sorting out what would be state-owned industries and what would not? Is there any --

AMBASSADOR KANTOR: There are a number of approaches that could be taken in that regard. In the main, we're trying to make sure that, of course, obligations under the President's executive order are met by the due date, meaning June 3rd. And we're continuing to look at that process.

Q: What do you now think is the likelihood that the sanctions can be avoided, given the lack of any kind --

AMBASSADOR KANTOR: I'd be unable to speak to that at this point. Obviously, you have to look at it at the time the executive order calls for a review.

Q: Can you say what would be sufficient to start the talks again?

AMBASSADOR KANTOR: Well, let me mention four or five things: First of all, there needs to be a commitment to the framework agreement itself. The goal of substantially increasing market access of foreign competitive goods and services. Tangible progress towards that goal, including opening up key sectors. Using objective criteria, quantitative or qualitative or both, in order to measure the success or failure of the deregulation efforts. A movement in regulatory reform. And a significant new commitment towards macroeconomic stimulus. That would be an outline of what we're looking for.

Q: Could you comment on the commitments by the Japanese auto companies this week to increase more parts -- increase their purchase of foreign-made parts? Is that the kind of thing that the United States is looking for? And could you describe, if we're looking for something else, what it is that --

AMBASSADOR KANTOR: It's a step, but much of it, of course, was already committed to in the 1992 plan. Therefore, it is not as large as we might have expected. And, of course, we are concerned that the government of Japan is not involved in these socalled voluntary efforts.

Q: When you say the door is open, would you accept any sort of Japanese official as negotiator to sort of sort out the difference between the two elements until or before June?

AMBASSADOR KANTOR: Well, it depends what happens. And, of course, we're always open for new proposals and the steps beyond step one. The Japanese government has made it clear there are other steps to come, and we will look at those and review those carefully when and if they are offered.

Q: What about the negotiator? If they so wish to send negotiators to talk to your government --

AMBASSADOR KANTOR: Well, they have not indicated that and we will meet that when, of course, that occurs, if and when it does occur. But we have no indication from the Japanese government in that regard.

Q: Do you have any comment on the Japanese decision to lift -- to remove the -- further strains on oil exports --

AMBASSADOR KANTOR: Well, this is, of course, a unilateral decision, as it always has been, on the part of Japan. Therefore, it's been up to Japan each year to either reinitiate what we call VERs, voluntary restraints on automobile and truck imports into the United States or not. As I understand at least the public statements by Mr. Kumagai, they've decided not to do that. I would only indicate that, of course, their sales -- our imports into the United States have been much lower than the VER over the past two years.

Q: What did you find most promising? Is there anything -- the deregulation insurance that's promising, or can you give us some --

AMBASSADOR KANTOR: There were some steps forward in the government procurement area. However, other than reiterating some of the positions that were taken just prior to February 11, and up to 4:00 a.m. in the morning on February 11 in the auto insurance sectors, there was no movement.

Q: And what about the stimulus package? Is that still to iffy and still too based on political developments yet to come?

AMBASSADOR KANTOR: There were no significant new commitments in the stimulus area.

Q: What about on regulatory reform? You mentioned that as one of the criteria. There's a lot of mention of regulatory reform in what's in the package that was put out in Tokyo.

AMBASSADOR KANTOR: It's broad and general and doesn't come down to the specific areas in which we have as you know initial concern; that is, in the government procurement area, medical technology and telecommunications, auto and auto parts and insurance in other areas. So we look forward to more specifics.

And as has been stated, frankly, the Japan Chamber of Commerce who said -- and industry chairman, Mr. Anaba, who said the program contains little substance. And the Federation of Bankers Association Chairman Akuto, said that the package just set out the directions for further steps and must be fleshed out quickly.

So this is something where I think there's general agreement that the package falls short.

Q: Ambassador Kantor, aren't you worried that -- this is only a first step for Japan -- and aren't you worried you're going to discourage the Japanese government from trying anything else?

AMBASSADOR KANTOR: No, we're not discouraged, and we said our door is open and we're prepared to work with our ally on this.

Q: You didn't mention any redeeming qualities of the package. Do the Japanese get any points for trying, or does this just fall so flat that you don't even feel they deserve that much?

AMBASSADOR KANTOR: I think we welcome any step towards trying to address these issues. However, this does not address our concerns. It's not a matter of points, this is not about winning or losing. It's about trying to address a mutually difficult issue which has been the subject of conversations for a long time between these two countries. We, of course, are determined that both countries should live up to their obligations under the framework agreement, and that's what we're going to insist upon.

Q: If they can't come up with some new initiatives in the areas that you outlined, would you welcome other types of measures like strong yen policy, interest rate changes, other types of fiscal stimulus or the extension of the tax --

AMBASSADOR KANTOR: Well, on that, let me just say, we welcome significant new commitments in the macroeconomic area which were not forthcoming. Second, of course, we are, of course, serious and committed in terms of opening up the Japanese economy to foreign competitive goods and services -- not just U.S. goods and services. So we're looking for both, and that's what the framework, of course, calls upon both countries to accomplish.

Q: You don't want any window dressing with foreign exchange --

AMBASSADOR KANTOR: As the President said on February 11, we don't want cosmetic agreements. We're not going to paper over our differences. We want to have agreements that are going to make a real difference.

Q: Have you made any arrangement with the Japanese to go back and do you expect the Japanese to make another proposal? Are there any negotiations scheduled? Can you give us any sense of --

AMBASSADOR KANTOR: No.

Q: what the next step is?

AMBASSADOR KANTOR: No.

Q: I want to make sure I understand. Are you convinced that the Japanese put forward this package believing that it would be acceptable?

AMBASSADOR KANTOR: You'd have to ask the Japanese government. Obviously, I can't speak for them in this regard, I can only speak for the government of the United States. But it's clear that this package is not acceptable to the five leading newspapers in the Japanese area -- in the Tokyo area -- as well as the Japanese business community, and it has not met our concerns here in the United States as well.

Q: But Mr. Hosokawa has known through negotiations what would be acceptable. So --

AMBASSADOR KANTOR: As I said, I would be not qualified to speak for the Japanese government on this subject. I would suggest you ask the Japanese government that question.

Thank you very much.

THE PRESS: Thank you.

END 3:45 P.M. EST