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Press Conference by Prime Minister Kiichi Miyazawa
at the 1993 G7 Economic Summit: Tokyo Summit III

12:16-12:45, July 9, 1993, Tsuru West Room, Hotel New Otani, Tokyo

• Overview of 1993 G-7 Economic Summit: Tokyo Summit III
• Slow recovery and unemployment
• Early and successful conclusion of the Uruguay Round
• Assistance to economies in transition
• Other issues in the Russian Federation and the G-7 Plus One Conference
• Assistance to developing countries
• Consultation between the G-7 countries and developing countries
• Political discussions
• Discussions on the future of G-7 Summit meetings
• Measures taken by Japan to stimulate the recovery of the world economy
• Market access negotiations and the international trading system
• Response of the G7 to the message from President Soeharto of the Republic of Indonesia as Chairman of the Non-Aligned Movement
• Growth of People's Republic of China as a regional and global economic power
• Preparation of the Economic Declaration
• Yen exchange rates
• Possible changes in the structure of the United Nations Security Council
• Possibility of consultations between the G-7 and the People's Republic of China

I. Overview of 1993 G-7 Economic Summit: Tokyo Summit III

Press Secretary Masamichi Hanabusa: I would like to start the press conference given by Prime Minister Miyazawa at the conclusion of the Tokyo Summit meeting. Prime Minister, please.

Prime Minister Kiichi Miyazawa: The Tokyo Summit this time was held against the background of increasing need for cooperation in the international community following the Cold War. We are faced with numerous problems, such as a delay in economic recovery around the world, serious unemployment and various difficulties that developing countries and Russia and other countries in transitions are faced with, global environmental problems, as well as problems affecting the maintenance of world peace, such as the eruption of new conflicts. Against that backdrop, I tried my best to make the Tokyo Summit meeting this time to become a forum for achieving effective policy coordination amongst the G-7 countries in order to cope with these problems. We have been able to exchange useful opinions amongst the Summit leaders, and I believe have also been able to produce several important results on some important problems.

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II. Slow recovery and unemployment

Prime Minister Miyazawa: The major problem for the world economy today is a laggard recovery and rising unemployment. At the Summit this time, we agreed on a world growth strategy that is in keeping with the specific economic situation in our countries. With regard to unemployment, there was an agreement on need for a "double strategy" -- that is, the promotion of non-inflationary sustainable growth and structural reform. The Heads of State and Government confirmed that this strategy would be implemented with firm determination.

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III. Early and successful conclusion of the Uruguay Round

Prime Minister Miyazawa: In the security and growth of the world economy, the early conclusion of the Uruguay Round is extremely important. Since middle May, Japan has been promoting the so-called "quadrilateral negotiations" energetically. Immediately before the Summit meeting, negotiations were once again held in Tokyo. These negotiations were very difficult; they went into the first day of the Summit meeting. However, at the end of the day, significant progress with regard to market access on goods and services was seen. And the Summit Heads of State and Government renewed their determination to try and achieve before the end of the year the conclusion of the Round by resolving many issues by relaunching the negotiations in Geneva. And I believe the agreement this time will definitely promote that negotiation process.

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IV. Assistance to economies in transition

Prime Minister Miyazawa: Since the demise of the former Soviet Union, it has been a matter of great concern for the Summit countries to support the political and economic reform in the countries in transition, especially Russia. With that in mind, Japan hosted the G-7 Joint Ministerial Meeting to support Russia in April in Tokyo, which produced a 15-item support program agreement. At the time of the Summit this time, we have been able to realize the release of the first tranche of the IMF Systemic Transformation Facility, which is a new facility, and also established, or decided on the establishment of the Special Privatization and Restructuring Program, and also numerous other decisions have been made since the April ministerial meeting.

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V. Other issues in the Russian Federation and the G-7 Plus One Conference

Prime Minister Miyazawa: We are also greatly concerned by numerous problems that Russia and others are encumbered with, such as the safety of their nuclear power plants. On the basis of the discussion we had this time, I look forward to having a very friendly and candid exchange of views with President Yeltsin, with whom we shall be meeting this afternoon. And we would like to share with him our perceptions of those problems, and also hear his views.

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VI. Assistance to developing countries

Prime Minister Miyazawa: One other matter of great interest for us in holding this Tokyo Summit meeting was the problem of developing countries. Since the meeting was taking place here in Tokyo, we wished to reflect the perspectives of the countries in the Asia-Pacific. At the Summit this time, we confirmed the importance of taking a comprehensive approach, encompassing Official Development Assistance (ODA), trade investment, as well as debt relief vis-a-vis developing countries, as well as a differentiated approach which is tailored to the diverse circumstances in the developing countries. And we also agreed on expanding ODA.

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VII. Consultation between the G-7 countries and developing countries

Prime Minister Miyazawa: As the chairman of the Tokyo Summit meeting, immediately prior to the Tokyo Summit meeting, I met with President Soeharto, who chairs the Non-Aligned Movement, here in Tokyo, and heard from him about the circumstances of the Non-Aligned Movement. And on that basis I presented President Soeharto's message seeking dialogue with the advanced countries during our meeting this time. The participants expressed high regard in that such a message would be useful. A major concern for the Asia-Pacific countries today is world economic recovery and the successful conclusion of the Uruguay Round. Such interest has been expressed in these items, and much attention was also paid in the Declaration this time to the remarkable growth of the East Asian countries.

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VIII. Political discussions

Prime Minister Miyazawa: In the political area, we conducted discussions on strengthening of the U.N.'s functions, proliferation of weapons of mass destruction, as well as regional issues, with a view to achieving a world which is both safer and more humane, and expressed a clear determination in coping with these problems.

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IX. Discussions on the future of G-7 Summit meetings

Prime Minister Miyazawa: Last but not least, since last year we have had discussions about the Summit meeting itself, which started in Rambouillet. At the Tokyo Summit this time, we had discussions on this matter, and I believe the general agreement is that we should have substantive discussions, that we should set aside as many hours as possible for the Heads of State and Government to discuss, to shorten the declarations as much as possible, and so on. We will remove the ceremonial aspects as well. I have been involved in this process in the past, and therefore I have been aware of these wishes, and I believe what we attempted this time has been received very well. We also had discussions on further details. The next Summit meeting will be held in July of next year in Naples, Italy. We have had the kind invitation by the Prime Minister of Italy, which we have gladly accepted. Thank you.

Press Secretary Masamichi Hanabusa: Thank you very much. Questions, please.

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X. Measures taken by Japan to stimulate the recovery of the world economy

Mr. Fukei (Asahi Shimbun): You referred at the very beginning to the greatest challenge for the Summit meeting this time which is the recovery of the world economy. According to the Economic Declaration that was adopted today, there is a reference to what Japan should be doing, and that is "to implement fiscal and monetary measures to ensure sustained non-inflationary growth led by strong domestic demand." Specifically what measures will Japan employ? And I would appreciate your answers on the following specific questions: The Government in the earlier session of the Parliament passed a supplementary budget to stimulate domestic demand; I wonder if there is going to be a second supplementary budget in the autumn, or in the medium-term? In compiling a budget proposal for next fiscal year, do you intend to further increase public works investment? In the United States, we hear some voices expecting income tax cuts in Japan; any views on that? My last question: On monetary policy, Japan already has lowered its interest rate, official discount rate, to the lowest-ever level; what is your view on further cuts?

Prime Minister Miyazawa: In the statement this time, we referred to the efforts that each of us -- Europe, North America, and Japan -- should be doing. Needless to say, what you mentioned is stated. Not that this should be done within a specific time span, but as G-7 we reaffirmed what is taken as common sense or conventional wisdom. As you mentioned, we did pass a supplementary budget earlier and implemented a huge Y13 trillion stimulative package, which I believe is appreciated. Such measures, fundamentally I believe, are important. To employ such measures, I think, is as a start very important, until there is a full- fledged recovery. Your question is whether there could be a second supplementary budget. My view is that, with the earlier supplementary package, the recovery will be put in place clearly, although gradually. And I therefore have no specific thoughts about a second supplementary budget. However, the economy being what it is, if recovery is laggard, then I believe we shall have to consider some additional measures. That should be taken for granted. Now, what about public works investment? That would be one of the items, but I believe there would be a need for a new public investment. This may not be a precise description, but we did have, for example, some new areas in terms of public investment covered in the earlier package. And I think these areas would be important: science and technology and education. You also asked about the tax. There is a feeling amongst the people that the tax burden is heavy, that the income tax burden is heavy. As I have been saying in the Diet, I do accept that. With the tax reform around 1987-1988, we drastically reduced the progressiveness of tax rates, and reduced the brackets to five. That was a significant reduction from the past. But from the viewpoint, shall I say, of our European or American allies, we should like to further cut these brackets. I think we shall have to consider the overall tax system. Next year would be the year for recalculation of pension finances, or pensions actually, and we will be facing some important turning points, and I think we are approaching the time where we shall have to be reviewing the tax system as a whole. Monetary policy belongs to the purview of the Bank of Japan. As you pointed out, the official discount rate in Japan today is at the lowest level in history, and I therefore have no specific comment to make on that.

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XI. Market access negotiations and the international trading system

Mr. Charles Leadbeater (Financial Times): Prime Minister, can I refer you to Paragraph 7 of the Declaration, which says, "We agree that no recourse should be made to initiatives and arrangements that threaten to undermine the multilateral open trading system." Do the U.S. demands for numerical targets for access to the Japanese market fit into that category of arrangements that would threaten the multilateral trading system, and do you think you have come away from this Summit with the understanding of your other G-7 partners of Japan's need to resist the U.S pressure for numerical targets?

Prime Minister Miyazawa: When I visited Washington, D.C., in April, in fact, this is a point that I put to President Clinton. And this position of ours, I believe, is fundamentally understood on the U.S. side. In other words, with regard to "numerical targets," as you put them, fundamentally they are not desirable and on top of that, even if we did undertake them, we should not be able to implement that undertaking. I believe that point is understood. So I don't think there is any problem of whether to resist that or not. That is my fundamental understanding of the problem.

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XII. Response of the G-7 to the message from President Soeharto of the Republic of Indonesia as Chairman of the Non-Aligned Movement

Mr. Edi Utama (Antara News Agency): Prime Minister, although you did say that the issues proposed by President Soeharto as NAM Chairman to you in the meeting was hardly touched upon in your meeting with other leaders, but we do find some points related to developing countries. Is this, practically, some kind of response to the proposal, reference or response?

Prime Minister Miyazawa: President Soeharto took the trouble of visiting with me and explaining the position of the Non-Aligned Movement. For me, that was very useful and most timely. I did explain this in detail to my colleagues at the G-7 meeting. If you read our Declaration, you will understand that although there is no specific reference to the name, President Soeharto, Paragraphs 13 and 14 do reflect what we discussed very properly. And I think this is an attestation to the usefulness of President Soeharto's visit to Tokyo this time. All the countries did express their agreement and appreciation. As we have been able to come to a sort of agreement or understanding, I shall soon send Deputy Foreign Minister Matsuura to Jakarta to make a report to President Soeharto, to gain his understanding.

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XIII. Growth of People's Republic of China as a regional and global economic power

Mr. Feng Meng Yu (Shanghai Xin-Min Evening News): I am a news reporter from China. I have heard you mention China, so I want to ask you, have you any more opinions about China's economic growth in Asian-Pacific area and even in the whole world's economic circle. What is the common sense of the G-7 leaders, what do they think about China's economic growth? Thank you very much.

Prime Minister Miyazawa: China today is further promoting its Open Door Policy and reform. They have been doing that since last year. This, fundamentally, is most welcome. As we look towards the 21st century, Chinese economic capability is expected to grow by leaps and bounds, without doubt. How will that affect the Asia-Pacific? How will that affect the world? I believe the effect would be, or the influence would be, unfathomable. The present growth rate of China is higher than other countries, of necessity. And if that higher rate continues, then what level the Chinese economy will reach in ten years' time, twenty years' time, that is a matter of simple calculation. So in the 21st century, China will grow into a very influential economy. That is how we view China, and from that vantage point, we have been receiving request from China for various cooperation, and we will gladly respond to their requests. Next question, please. Yes?

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XIV. Preparation of the Economic Declaration

Mr. Atsushi Yamata (Asahi Shimbun): This is a question regarding the Summit Declaration. When you gave a review, there doesn't seem to be much difference between the Declaration that had been agreed upon by the Summitteers and the one that had been prepared by the deputies. Is it that,although the Summitteers come together, they don't discuss much beyond what has already been discussed by the deputies?

Prime Minister Miyazawa: I think that question is topsy- turvy. The sherpas consult and draft these documents after asking for the views of Heads of State and Government. You mentioned that things that were not in the past have been put in the documents, but we have only put in the documents what the Foreign Ministers and Finance Ministers actually did discuss.

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XV. Yen exchange rates

Mr. John Standing (Bloomberg Business News): Prime Minister, I would just like to ask why was there no discussion at the Summit on yen exchange rates, given the recent volatility in the currency markets in recent weeks, and the use of the yen exchange rates to control Japan's trade surplus. Were these issues discussed? If they were not, why not?

Prime Minister Miyazawa: There was no discussion on that point. As there were frequent statements on this matter at the G-7 Finance Ministers' and Central Bank Governors' Meetings, exchange rates should reflect the economic fundamentals. That would be most desirable. There has been that agreement amongst the G-7, and that is why there was no discussion at the G-7 this time.

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XVI. Possible changes in the structure of the United Nations Security Council

Mr. Gebhard Hielscher (Suddeutsche Zeitung): Regarding the question of membership in the permanent committee of the U.N. Security Council, if this kind of request comes, is it agreeable for becoming members without the veto right? In the case of Germany, we have the opinion that unless we have the veto right, we will not become a permanent member. In the case of Japan, how is your position? For example, the Japanese Government has already expressed that they are prepared to become a permanent member, but without the veto right, do you still intend to become a member, or if you do not have the veto right, you do not intend to become a member?

Prime Minister Miyazawa: Our stance on this point has not been deliberated as much as in Germany, on the question of whether there is a veto or not, as suggested by Mr. Hielscher, it has not been discussed domestically in Japan. What is on our mind is that Japan has acquired substantial economic strength. Therefore, if requested, we shall do all our best to contribute to the United Nations. That is our fundamental attitude. Having said that, based on that stance, when requested by Secretary-General Boutrous-Ghali, we presented our opinion paper recently. But expansion of the membership of the U.N. Security Council will lead to the revision, the amendment of the U.N. Charter itself. This is no easy matter. Obviously, there will be numerous other countries that will raise their hand and express their wish to become permanent members. Japan has no intention of conducting, shall I say, an election campaign to become a member. If that is done, I believe the working of the Security Council may be affected seriously. So I don't think that is the right thing to do. But if requested, I believe that Japan should do its part as much as possible within the extent permissible by the Japanese constitution. That is our current stance. We have not really gotten to the stage of discussing veto or no veto.

Press Secretary Masamichi Hanabusa: Because of time limitations, this will be the last question.

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XVII. Possibility of consultations between the G-7 and the People's Republic of China

Mr. Ni Yin Liang (Jie Feng Daily): Prime Minister, did the G-7 leaders talk about the possibility to invite China to attend the G-7 Summit the next time or in the future? Personally, I think as a big country, Chinese leaders should be invited to exchange their viewpoints face to face with the G-7 leaders.

Prime Minister Miyazawa: I found your question difficult to hear, but I gather what you are asking is whether the G-7 intends to invite China to our meeting, whether there was any discussion on inviting China to a G-7 meeting. We have had no discussion on that this time. We do admit that China is a big country with great potential. There is no doubt about that. But we did not discuss any possibility of inviting China this time. With this, I am to conclude the press conference. Thank you very much.

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