H. Res. 392
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 glob-
al economic and trading system;
Whereas the United States-Japan Security Alliance and close
economic cooperation have underpinned the security, sta-
bility, 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 cred-
its for the three International Monetary Fund program
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countries, South Korea, Thailand, and Indonesia, totaling
$19,000,000,000, and its substantial structural adjust-
ment loans and export credits to Indonesia, have helped
contain the financial crisis, but are an inadequate alter-
native to a strong Japanese economy;
Whereas Japan accounts for three-fourths of the total East
Asian Gross Domestic Product and therefore has the po-
tential 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 substan-
tial 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 fi-
nancial 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 ex-
ports 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
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Japanese yen against the United States dollar and there-
fore 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 bal-
ance sheet adjustments by Japanese financial institu-
tions, 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 objec-
tives;
Whereas inadequate deregulation initiatives have failed to re-
store vitality to the Japanese economy, while truly sig-
nificant 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
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Resolved, That it is the sense of the House of Represent-
atives 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 demo-
cratic political system:
(1) Undertake a broader and faster deregulation of
its economy, in order to improve long-term growth pros-
pects and promote opportunities for foreign firms, im-
prove transparency and disclosure, reward innovation
and competition, and reduce systemic risk.
(2) Further open its distribution system to elimi-
nate 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 multi-
lateral 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
•HRES 392 EH
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 prob-
lems 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 comprehen-
sive 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.