Final decisions have not been made on the size of the FY99 initial budget. We hope the authorities will move quickly to implement these tax cuts and lay out the details of the second FY98 supplemental and FY99 initial budgets, so that Japanese consumers and businesses can have confidence that there will be significant and enduring improvements in after-tax incomes and fiscal support for recovery. On financial restructuring, Japan needs to move aggressively to strengthen and restructure banks, to dispose of bad assets, and to improve bank supervision and disclosure. We look forward to swift actions by the government. Excessive regulation restricts business investment opportunities, saps entrepreneurial drive, discourages consumption, and breeds inefficiency and waste.
Regulations also impede the entry of highly competitive American firms into the Japanese market.
Critics of deregulation say that such changes will lead to unemployment, deflation and excessive competition. These critics are simply wrong. The U.S. pledges to work with the Government of Japan under the Enhanced Deregulation Initiative to promote accelerated regulatory reform in Japan that will benefit both Japanese and Americans. As we have said time and again over the past year, an early restoration of growth is critical for Japan, for the region, for the emerging markets, and indeed for the world economy as a whole. This also has implications for our trade relationship with Japan, which is vitally important.