The Asian financial crisis, of course, increases the urgency of effective Japanese steps on the macroeconomic side. Our interest, to be sure, is more than mere idealism. Japan's sluggish growth has been inhibiting imports into Japan, including those from the United States, and compounding Japan's rising trade surpluses. Yet stimulus measures cannot by themselves restore the vigor of Japan's economy over the longer term. In this era of revolutionary global change and interdependence, it is important that Japan take quick and decisive action to deal with the problems in its financial system, in order to remove that constraint on economic growth.
Structural reforms are also important.
In particular, the flexibility, resilience, and clear welfare benefits that come with serious deregulation will be crucial in aiding Japan to meet the challenges of this new era. In the preparations for next month's Birmingham Summit, more effective Japanese steps toward deregulation will be a major concern of the United States. Prime Minister Hashimoto and President Clinton jointly affirmed the importance of effective deregulation at both the Denver and Vancouver summits last year, and we in the U.S. Government continue to place priority on this issue. Japanese people and their international trading partners can both benefit from deregulation. True deregulation should provide a major long-run support for economic growth.