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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 392 Engrossed in House (EH)]

                 In the House of Representatives, U.S.,

                                                         July 20, 1998.
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;
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 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 fast-growing 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
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
    Resolved, That it is the sense of the House of Representatives that Japan 
should urgently undertake the following steps to enhance alliance cooperation 
and raise Japan to the position of regional partnership that it should enjoy by 
virtue of its economic size, technological achievements and its democratic 
political system:
            (1) Undertake a broader and faster deregulation of its economy, in 
        order to improve long-term growth prospects and promote opportunities 
        for foreign firms, improve transparency and disclosure, reward 
        innovation and competition, and reduce systemic risk.
            (2) Further open its distribution system to eliminate exclusionary 
        and discriminatory business practices that are not only limiting imports 
        but stifling economic growth and competition in Japan.
            (3) Fully honor and implement its bilateral trade agreements with 
        the United States as well as its multilateral trade commitments.
            (4) Take other aggressive steps to reduce numerous barriers to 
        imports and foreign investment and seek to lower its current account 
        surplus to 2 percent or less of gross domestic product.
            (5) Move promptly to dispose of nonperforming bank loans by 
        disposing of nonperforming real estate and other loans and by allowing 
        the market to determine the real value of these assets and loans.
            (6) Take immediate steps to address systemic problems in the banking 
        system, close insolvent banks, and recapitalize weaker banks with banks 
        that have strong fundamentals and good management.
            (7) Address its fiscal problems in a manner that does not jeopardize 
        economic recovery, with an emphasis on significant and meaningful tax 
        cuts and a comprehensive stimulus package that restores economic 
        confidence and avoids the traditional sectorally-oriented approach of 
        the past.
            (8) Adopt all appropriate policies to strengthen the Japanese yen.
            Attest:

                                                                          Clerk.
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