IV

House Calendar No. 229

105TH CONGRESS

2D SESSION H. RES. 392

[Report No. 105–607, Part I]

Relating to the importance of Japanese-American relations and the urgent

need for Japan to more effectively address its economic and financial

problems and open its markets by eliminating informal barriers to trade

and investment, thereby making a more effective contribution to leading

the Asian region out of its current financial crisis, insuring against

a global recession, and reinforcing regional stability and security.

IN THE HOUSE OF REPRESENTATIVES

MARCH 24, 1998

Mr. BEREUTER (for himself and Mr. BERMAN) submitted the following resolution; which was referred to the Committee on International Relations,

and in addition to the Committees on Banking and Financial Services,

and Ways and Means, for a period to be subsequently determined by the

Speaker, in each case for consideration of such provisions as fall within

the jurisdiction of the committee concerned

JUNE 25, 1998

Reported from the Committee on International Relations with amendments

[Strike out the preamble and insert the part printed in italic]

[Strike out all after the resolving clause and insert the part printed in italic]

JUNE 25, 1998

The Committee on Banking and Financial Services discharged

JUNE 25, 1998

Referral to the Committee on Ways and Means extended for a period ending

not later than July 17, 1998

JULY 17, 1998

Additional sponsors: Mr. HINCHEY, Mr. CAMPBELL, Mr. SANFORD, Mr. GILMAN, Mr. KOLBE, Mr. WATTS of Oklahoma, Mr. PETERSON of Pennsylvania, Mr. NETHERCUTT, Mr. SOUDER, Mr. BARRETT of Nebraska, Mr.
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•HRES 392 RH

MATSUI, Mr. PAXON, Mr. DOOLITTLE, Mr. KNOLLENBERG, Mr. OXLEY,

Mr. PORTER, Mr. FALEOMAVAEGA, Mr. ROYCE, and Mr. WISE

JULY 17, 1998

The Committee on Ways and Means discharged; referred to the House

Calendar and ordered to be printed

[For text and preamble of introduced resolution, see copy of resolution as introduced on March

24, 1998]

RESOLUTION

Relating to the importance of Japanese-American relations

and the urgent need for Japan to more effectively address its economic and financial problems and open its

markets by eliminating informal barriers to trade and

investment, thereby making a more effective contribution

to leading the Asian region out of its current financial

crisis, insuring against a global recession, and reinforcing

regional stability and security.

Whereas the maintenance and improvement of a very positive

international relationship between the United States and

Japan is vital to the two countries and to the entire global

economic and trading system;

Whereas the United States-Japan Security Alliance and close

economic cooperation have underpinned the security, stability, and prosperity of the Asia-Pacific region, thereby

allowing that region to enjoy unmatched economic growth

and development for nearly three decades;

Whereas the current financial crisis in Asia threatens the foundation of Asia’s unmatched peace and prosperity, the stability of the global economic system, and related vital

American security and economic interests;
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•HRES 392 RH

Whereas, although the Government of Japan’s

$128,000,000,000 economic stimulus and tax reduction

package of April 24, 1998, includes numerous provisions

designed to promote consumer spending and industrial

growth, it is by no means clear that these measures will

restore economic growth or will be targeted at the most

productive sectors of the economy;

Whereas Japan’s generous contributions to second line credits

for the three International Monetary Fund program countries, South Korea, Thailand, and Indonesia, totaling

$19,000,000,000, and its substantial structural adjustment

loans and export credits to Indonesia, have helped contain

the financial crisis, but are an inadequate alternative to

a strong Japanese economy;

Whereas Japan accounts for three-fourths of the total East

Asian Gross Domestic Product and therefore has the potential to help pull the region out of the financial crisis by

serving as its ‘‘engine of growth’’, just as the United

States, by being an ‘‘engine of growth’’ and having open

markets, earlier assisted Mexico emerge from a substantial

financial crisis;

Whereas a further weakening of the yen could trigger a round

of competitive devaluations among Japan’s Asian neighbors;

Whereas deteriorating economic conditions and ongoing financial market turbulence in Asia make it increasingly important that Japan play a leadership role in helping to

restore confidence in the economic future of the region;

Whereas that regional leadership role coincides with Japan’s

stated goal of promoting strong domestic demand-led
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•HRES 392 RH

growth and avoiding a significant increase in its external

trade surplus;

Whereas Japan’s continued economic stagnation depresses the

level of its imports from the United States and other countries in the Asia-Pacific region, thereby forcing its neighbors in the region to rely more heavily on their exports to

the United States for growth;

Whereas weakened economic fundamentals in Japan and an

accommodative monetary policy, coupled with a robust

United States economy, have weakened the value of the

Japanese yen against the United States dollar and therefore stimulated a rapid expansion of exports and a fastgrowing merchandise trade surplus with the United States,

which increased from $48,000,000,000 in 1996 to

$55,000,000,000 in 1997;

Whereas the bursting of Japan’s investment bubble in 1991 has

been accompanied by protracted asset-price and balance

sheet adjustments by Japanese financial institutions, leading to a scarcity of credit and weak growth;

Whereas policies favoring low interest rates had encouraged,

until recently, excessive private sector lending to overly indebted enterprises in Indonesia, Korea, and Thailand, and

thereby contributed to the private debt crisis in the region;

Whereas past efforts to stimulate recovery through deficit

spending targeted at the construction sector have proved

inadequate and failed to accomplish their desired objectives;

Whereas inadequate deregulation initiatives have failed to restore vitality to the Japanese economy, while truly significant deregulation could add as much as a percentage point

or more to Japanese economic growth; and
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•HRES 392 RH

Whereas the continued failure of the Government of Japan to

properly recognize and remedy the aforementioned policies

will both prolong the Asian financial crisis and contribute

to the inevitable rise in the American trade deficit with

Japan, thereby potentially undermining American domestic support for close economic, political, and security cooperation and coordination between the United States and

Japan at a critical point in history: Now, therefore, be it

1 Resolved, That it is the sense of the House of Rep2 resentatives that Japan should urgently undertake the fol3 lowing steps to enhance alliance cooperation and raise

4 Japan to the position of regional partnership that it should

5 enjoy by virtue of its economic size, technological achieve6 ments and its democratic political system:

7 (1) Undertake a broader and faster deregulation

8 of its economy, in order to improve long-term growth

9 prospects and promote opportunities for foreign firms,

10 improve transparency and disclosure, reward innova11 tion and competition, and reduce systemic risk.

12 (2) Further open its distribution system to elimi13 nate exclusionary and discriminatory business prac14 tices that are not only limiting imports but stifling

15 economic growth and competition in Japan.

16 (3) Fully honor and implement its bilateral

17 trade agreements with the United States as well as its

18 multilateral trade commitments.
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•HRES 392 RH

1 (4) Take other aggressive steps to reduce numer2 ous barriers to imports and foreign investment and

3 seek to lower its current account surplus to 2 percent

4 or less of gross domestic product.

5 (5) Move promptly to dispose of nonperforming

6 bank loans by disposing of nonperforming real estate

7 and other loans and by allowing the market to deter8 mine the real value of these assets and loans.

9 (6) Take immediate steps to address systemic

10 problems in the banking system, close insolvent banks,

11 and recapitalize weaker banks with banks that have

12 strong fundamentals and good management.

13 (7) Address its fiscal problems in a manner that

14 does not jeopardize economic recovery, with an em15 phasis on significant and meaningful tax cuts and a

16 comprehensive stimulus package that restores eco17 nomic confidence and avoids the traditional

18 sectorally-oriented approach of the past.

19 (8) Adopt all appropriate policies to strengthen

20 the Japanese yen.

House Calendar No. 229

105TH CONGRESS

2D SESSION H. RES. 392

RESOLUTION

[Report No. 105–607, Part I]

Relating to the importance of Japanese-American

forcing regional stability and security.sis, insuring against a global recession, and reinthe Asian region out of its current financial crimaking a more effective contribution to leadingformal barriers to trade and investment, therebyproblems and open its markets by eliminating ineffectively address its economic and financialrelations and the urgent need for Japan to more

JULY 17, 1998

The Committee on Ways and Means discharged; referred

to the House Calendar and ordered to be printed