IV

105TH CONGRESS

2D SESSION H. RES. 392

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

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
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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;

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 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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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 the resulting current poor asset position of Japanese

banks and financial institutions has created a domestic

credit crunch that greatly hinders their role in Japan’s

economic recovery;

Whereas past efforts to stimulate recovery through deficit

spending targeted on the construction sector have proved
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inadequate and failed to accomplish their desired objectives;

Whereas the 1997 consumption tax increase choked off a

promising acceleration of economic growth;

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

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

5 should enjoy by virtue of its economic and technological

6 achievements and its democratic political system:

7 (1) Undertake a broader and faster deregula8 tion of its economy, in order to improve long-term

9 growth prospects and promote opportunities for for10 eign firms, improve transparency and disclosure, re-
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1 ward innovation and competition, and reduce sys2 temic risk.

3 (2) Further open its distribution system to

4 eliminate exclusionary and discriminatory business

5 practices that are not only limiting imports but sti6 fling economic growth and competition in Japan.

7 (3) Fully honor and implement its bilateral

8 trade agreements with the United States as well as

9 its multilateral trade commitments.

10 (4) Take other aggressive steps to reduce nu11 merous barriers to imports and foreign investment

12 and seek to lower its current account surplus to 2

13 percent or less of Gross Domestic Product.

14 (5) Move promptly to dispose of nonperforming

15 bank loans by disposing of nonperforming real estate

16 and other loans and by allowing the market to deter17 mine the real value of these assets and loans.

18 (6) Take immediate steps to address systemic

19 problems in the banking system, close insolvent

20 banks, and recapitalize weaker banks with banks

21 that have strong fundamentals and good manage22 ment.

23 (7) Address its fiscal problems in a manner

24 that does not jeopardize economic recovery, with an
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1 emphasis on significant and meaningful tax cuts

2 rather than sectorally oriented stimulus.

3 (8) Adopt all appropriate policies to strengthen

4 the Japanese yen.

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