Remarks in an Interview With Representatives of Yomiuri Shimbun of Japan, Together With Written Responses to Questions

Japan-U.S. Relations

Q. First question is about the U.S.-Japan relation, and I think the U.S.-Japan relation becoming even more important today in the context of their respective roles in the maintenance of peace and prosperity. At the outset of this press interview, would you give us your thought about the state of unison of the two countries, as we stand today, and also its future?

The President. Well, I believe that the relationship between our two countries is strong, vital, and healthy. And I think the warmth of the friendship is epitomized in the affection and respect that Prime Minister Nakasone and I have for each other. I consider him a very close, personal friend. But the other thing about our two countries, too, is that we are both nations on the Pacific rim, and I happen to believe that the world's future further development lies in the Pacific Basin. And we are, and do happen to be, the two greatest economic powers on the rim of the Pacific Basin, and therefore I think we share a great responsibility in the future of the whole Pacific Basin there. So I think all of our people are very pleased about the relationship that we have, and I'm sure it will continue.

Japan-U.S. Meetings and the Tokyo Economic Summit

Q. May I move to the second question? As you know, our Prime Minister Nakasone is visiting here in Washington this weekend, and he'll have very important talks with you. And the Tokyo summit meeting—[inaudible]—so what do you think will be focused [on] in the bilateral and Tokyo summit meetings?

The President. I think some of the things will be a discussion of the relationship of our nations here in the free world with the Soviet Union and what progress we can all make together with regard to reducing, particularly, the nuclear weapons that now hang over the world as a threat. That will be certainly one very important subject of discussion. I think also the economic situation of the summit nations will be very important. Some of them were slower in coming out of the recession that the world was in a few years ago, but now all seem to be progressing better. I think we will be discussing trade matters between all our nations, and I know definitely the Prime Minister and I will be discussing our own bilateral trade situation. We've made great progress; and it's essential, too, that the leading trading nations of the world, such as those that make up the summit economic conference, that all of us continue our recovery and our expansion, our economic recovery and making economic progress, provide more employment. And we really are all sort of bound together in that. It's going to be very difficult for any one nation to be prosperous if all aren't doing well. So, I think we'll have a full plate.

Terrorism

Q. And do you have any intention to take up the issue of concerted action against terrorism?

The President. Yes, I'm glad you mentioned that. Yes. Terrorism must definitely be discussed by all of us, because only by working together can we wipe out this very cowardly but very cruel and damaging practice. So, I'm sure that we'll be talking about that. We have an example last year of what can be done with cooperation between us. So far we've been improving our relationship in exchanging intelligence information about terrorist threats. And last year—it's little known—but last year we were able to abort and cut off, prevent from happening, 126 terrorist operations. So, yes, that will very definitely be a subject for discussion.

Q. Thank you very much.

The President. Well, thank all of you. It's a pleasure to see you.

The President's Responses to Questions Submitted by Yomiuri Shimbun

Aerospace Transportation Research

Q. We are very much impressed when you discussed for the first time about a concept of aerospace plane called Orient Express in your State of Union Message. Would you elaborate more on that project as to why it is so important and what specific steps are being contemplated at your government to carry on your proposal? Also, is it feasible to call on Japanese cooperation in this area, because it is common interest to Japan as well as your country?

The President. In January 1 announced that we are going forward with research on a new Orient Express, a new generation of aircraft that will fly at many times the speed of sound. If our studies show that an aerospace plane is feasible, it would mean a major advance in air transportation and space exploration. We are still at a preliminary stage of technology assessment. But following this assessment, we could decide to go on to development within 2 or 3 years. We will certainly consider the possibility of cooperation with other nations once the initial assessment is complete.

Japanese International Role

Q. As one of the new Japanese roles in the world, she is expected to expand economic and strategic assistance to developing countries. To which countries and areas would you like to see Japan increase strategic assistance? Concerning debt problems, a new American initiative by Treasury Secretary called Baker's plan has been proposed. In this regard, what role would you expect to be played by Japan?

The President. First, I want to commend Japan for strengthening its overseas development assistance (ODA) programs over the past 10 years, to the point where today Japan is second as a worldwide ODA donor. Japan's new commitment to double once again its annual ODA spending in the next 7 years is a worthy goal. I am pleased at the prospect that Japan will continue to increase its overall assistance levels, improve the quality of its aid, and seek to assist those nations in most urgent need of support. Although Japanese economic assistance has been made and will remain very important to other countries in Asia, I hope Japan will continue to take a more global view in expanding its assistance programs to other vital regions.

We appreciate the support we have received from the Japanese Government and from private Japanese banks for Treasury Secretary Baker's plan for increased private and multilateral financing for important debtor nations. Such financing would be related to the pursuit of sound economic policies in the borrowing countries. As we move forward in concert with the World Bank and the IMF [International Monetary Fund], Japan's support will be critical to the success of this program for sustained growth.

International Trade and Monetary Policies

Q. Under the new circumstances of declining U.S. dollar and oil price, what initiatives are you thinking of for world economic relations? What importance would you place on an international conference for monetary reform and removal of unfair trade practices, or the New Round, you referred to in your State of Union Message?

The President. The recent strengthening of major currencies vis-a-vis the American dollar and the decline in oil prices are welcome developments. So is the remarkable decline in inflation throughout the industrial world. We must be determined in our efforts to bring about sustained, noninflationary growth on a global basis. And these efforts start at home—in every country. Internationally, we seek to strengthen the system of free and fair trade and the free movement of capital in order to increase global economic efficiency and raise the standard of living for people in all countries.

Better economic performance and more consistent policies among the major market economies are the keys to the smooth functioning of exchange rates. As you know, in January 1 asked Treasury Secretary Baker to determine whether a conference on exchange rates would be appropriate. Secretary Baker is studying this question in light of developments in international trade and finance, including discussions this month of the IMF Interim Committee and at the OECD [Organization for Economic Cooperation and Development] Ministerial meeting.

We have high hopes for the new round of multilateral trade negotiations under the auspices of the GATT [General Agreement on Tariffs and Trade]. We seek to strengthen GATT and extend GATT discipline to agriculture, services, investment, and intellectual property. We all recognize free trade must also be fair trade, and we must work diligently, both bilaterally and multilaterally, to remove barriers to trade. When we identify such barriers, we try to eliminate them through negotiations with our trading partners. Where these negotiations fail, we are compelled to act to ensure that American businesses and American farmers are not injured by these practices. The open trading system requires that all participants in the world economy play on a level field, free from arbitrary and discriminatory barriers to the movement of goods, services, and capital. I look forward to discussing these crucial global economic issues with Prime Minister Nakasone and our colleagues from Germany, France, the United Kingdom, Italy, Canada, and the European Community at the summit in Tokyo.

Japanese Import Policy

Q. For Japanese part, in addition to her opening market policy, Japan has been strongly urged at home and abroad to change substantially her economic structure from the export oriented to the domestic consumption, in such areas as fiscal monetary policy, tax system, and so forth. How would you assess Japanese effort in that regard guided by the Prime Minister's advisory group?

The President. The report prepared by Mr. Mackawa and the other members of the advisory group contains important recommendations for the future of Japan's economy. I look forward to hearing more about the recommendations and their implementation from Prime Minister Nakasone when I meet with him at Camp David this weekend. I understand that the Japanese Government has taken some steps to increase domestic-led growth to stimulate imports. We applaud these efforts and hope that the Mackawa commission report will lead to further progress. An increased role for imports, especially for manufactured and other value-added goods, in Japan's economy will be an important step in promoting greater harmony between Japan and its trading partners.

Japan-U.S. Exchange Rates and Trade

Q. We are hopeful of improvement of U.S.-Japan trade imbalance to some extent by recent readjustment of U.S. dollar and Japanese yen exchange rate. What is your assessment of 1 dollar-180 yen rate? Other than readjustment of foreign exchange rate, do you have any new idea to solve trade frictions, such as U.S.-Japan free trade agreement privately proposed by Ambassador Mike Mansfield?

The President. It is not for me to say what is the proper exchange rate. This determination must be left to free market forces, although I note that the recent shift in the dollar-yen relationship should help to make U.S. exports more competitive in Japan. Current U.S. policy deals with several problem areas: economic structural factors, including the yen-dollar relationship, and trade liberalization, among others. There are no quick or easy fixes. In the area of trade liberalization, the sectoral trade negotiations under the Market Oriented Sector Specific discussions (MOSS) have been a valuable tool for resolving problems in a cooperative, trade-expanding manner. The United States and Japan have agreed to continue this effort, to follow up on what has been accomplished thus far, and to start work on new sectors as well. Prime Minister Nakasone has also been very energetic in internationalizing Japan's economy, though Japan recognizes more needs to be done. The action program Japan announced last July pledged that Japan's economy will be free in principle, with restrictions the exception. The upcoming multilateral trade negotiations should also play an important role here.

Strategic Defense Initiative

Q. Strategic Defense Initiative (SDI) is approaching a developing stage. Now that the U.K. and West Germany have decided to join the program, how do you think of importance of Japanese participation in SDI program, and what role Japan can play in it? Would you expect the issue to be raised in your talks with Prime Minister Nakasone and Tokyo summit meeting?

The President. The United States welcomes the widest possible Japanese participation in the SDI research program. We believe such participation would be beneficial both to Japan and to the program itself. That decision, of course, is one for the Government of Japan to make.

Conventional Defense Initiative

Q. Granted the ultimate goal of eliminating strategic weapons be attained eventually, there remains a threat of tactical nuclear weapons; and some experts in Washington are suggesting that U.S. Government should undertake a so-called Conventional Defense Initiative (CDI) to develop unmanned, highly computerized, attack airplanes. Do you plan to give a serious consideration to CDI in much the same way as SDI?

The President. The effort to improve Western conventional capabilities, the NATO Conventional Defense Initiative (CDI), is hardly new and has my full support. We are looking for more progress toward improving NATO's conventional defense. I would note, in particular, the decision by NATO Defense Ministers in December 1984 to double infrastructure funding and their agreement to work toward increasing necessary munitions stockpiles. In May 1985 NATO Defense Ministers reaffirmed the 3-percent defense spending increase goal. We look forward to the fulfillment of this pledge and even more substantial improvements by NATO nations in response to the NATO force goals to be adopted this spring. We will work hard to advance this process, and the United States will continue to lead by example.

Japanese Defense Role

Q. What would you think of Japanese security role in the context of U.S.-Japanese cooperation vis-a-vis Soviet Union, who has begun to show a smile diplomacy toward Japan? Would you like Japan to expand any military role beyond the 1,000-mile sealane defense which Japan is about to undertake?

The President. The United States views Japan as a cornerstone of our mutual security. The facilities made available to U.S. forces in Japan and U.S. access to those facilities are vital to the defense of our common interests in the Far East. Japan's self-defense roles and missions, as described by former Prime Minister Suzuki in 1981, are to protect its territory, seas and skies, and its sealanes out to 1,000 nautical miles. The United States endorses these Japanese undertakings and hopes that Japan will attain the capability of fulfilling these roles and missions as soon as possible. Neither the United States nor, we believe, Japan seeks a broader military role beyond that of self-defense.

Soviet-US. Summit and Arms Control

Q. We are very much interested in the development of U.S.-Soviet relations. What is the prospect for this year's U.S.-Soviet summit under the situation in which the Soviets seem to link the summit to the nuclear test ban and the progress of the arms control talks? Would you accept September or even December as a timing for the summit if the Soviets insist on holding the second meeting this year in the United States? And how would you assess ongoing U.S.-Soviet arms control talks?

The President. We agreed at the Geneva summit to meet in the United States this year and again in the Soviet Union in 1987. We are encouraged by the fact that Secretary [of State] Shultz and Foreign Minister Shevardnadze will be meeting in May to discuss preparations. The arms control negotiations have, unfortunately, not moved forward the way we had hoped. The Soviets have still not responded concretely to the proposals we made in November. In regard to the one area in the Soviet announcement of January 15 which offered some hope for progress, INF, the U.S. has already tabled in Geneva a concrete new proposal to eliminate such weapons by the end of the decade. Here, too, the lack of a concrete Soviet response has been disappointing. Our negotiators are ready for serious bargaining, and if the Soviets show similar flexibility progress can be made.

Asian Stability and Economic Development

Q. On the occasion of your visit to Indonesia and meeting with ASEAN [Association for South East Asian Nations] leaders in advance of Tokyo summit, what policies would you state for stability and economic development of Asian countries, such as increased economic and military assistance to Aquino government of the Philippines after the change of the leadership in which the U.S. played an important role?

The President. Under President Soeharto's leadership, Indonesia has made impressive strides in economic development and become an increasingly active player on the world stage. ASEAN is the central pillar of U.S. policy in Southeast Asia and an impressive example of cohesion and common purpose. We support ASEAN's strategy for bringing about a Vietnamese withdrawal from Cambodia and the restoration of Cambodian independence. The U.S. shares with ASEAN a commitment to a free market system. We want to work together to strengthen that system and to resist protectionism.

We have discussed Philippine assistance needs and priorities with President Aquino's government and with other major bilateral and multilateral donors. We want to help the new Philippine Government meet pressing financial needs and bolster the efforts of democratic forces in that country to address the serious economic and security challenges facing them, including the threat posed by the Communist insurgency.

Korea

Q. Would you think of specific steps taken by the U.S. Government to ease tensions surrounding South Korea, who is sponsoring Asian games this summer and 1988 Olympic games?

The President. The future of the Korean Peninsula, of course, is a matter primarily for the Korean people to decide. That is why the north-south dialog is so important. In our view, it is key to reducing tensions on the Korean Peninsula. Therefore, we support that dialog and hope that North Korea will resume it as soon as possible.

Other initiatives designed to reduce tensions include the confidence-building measures we have proposed in the Military Armistice Commission at Panmunjom. These measures include proposals such as restoring the integrity of the Demilitarized Zone. We hope North Korea will address this problem in good faith.

We are pleased to see South Korea hosting important events like the Asian games and the Olympics. Looking toward the 1988 games, we will do what we can to ensure a successful Olympics.