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 resolu-
tion; 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 ad-
dress 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
•HRES 392 IH
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 Japan’s generous contributions to second line cred-
its for the three International Monetary Fund program
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 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
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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 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
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 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 objec-
tives;
Whereas the 1997 consumption tax increase choked off a
promising acceleration of economic growth;
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
Resolved, That it is the sense of the House of Rep-
resentatives that Japan should urgently undertake the fol-
lowing steps to enhance alliance cooperation and raise
Japan to the position of regional partnership that it
should enjoy by virtue of its economic and technological
achievements and its democratic political system:
(1) Undertake a broader and faster deregula-
tion of its economy, in order to improve long-term
growth prospects and promote opportunities for for-
eign firms, improve transparency and disclosure, re-
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ward innovation and competition, and reduce sys-
temic risk.
(2) Further open its distribution system to
eliminate exclusionary and discriminatory business
practices that are not only limiting imports but sti-
fling 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 nu-
merous 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 deter-
mine 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 manage-
ment.
(7) Address its fiscal problems in a manner
that does not jeopardize economic recovery, with an
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emphasis on significant and meaningful tax cuts
rather than sectorally oriented stimulus.
(8) Adopt all appropriate policies to strengthen
the Japanese yen.
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