Rhetoric Retreats At Summit U.S., Japan Get Along During Group Of Seven Finance Session
Despite the soaring U.S. trade deficit with Japan and the yen’s weakness against the dollar, Washington and Tokyo appeared to tone down their trade dispute Saturday during a major economic gathering in Hong Kong.
U.S. Treasury Secretary Robert Rubin and Japanese Finance Minister Hiroshi Mitsuzuka agreed Japan’s economic slowdown is serious. But Rubin withheld criticism of Japan’s policies and demanded no specific action.
Rubin also did not focus heavily on U.S. concerns about Japan’s widening trade surplus when finance ministers from the Group of Seven nations met Saturday, said Canadian Finance Minister Paul Martin.
“The atmosphere was very good, and there was not an extensive discussion” about U.S.-Japanese relations, Martin said.
Japan chaired the meeting of G-7 ministers, who represent the world’s leading industrialized democracies.
The meeting was held ahead of next week’s annual meeting of the World Bank, the financier of global development, and the International Monetary Fund, the overseer of countries’ debts and currencies.
The G-7 gathering was more harmonious than usual, with the U.S.-Japan trade situation overshadowed by broader concern over the prospect of slower growth in Asia.
Rubin and the other G-7 ministers said they agreed on the need for greater openness and improved regulation of financial institutions in Southeast Asia and other developing economies.
The G-7 ministers also urged Thailand to implement reforms prescribed by the IMF after the Thai currency lost 30 percent of its value against the dollar in July.
Earlier Saturday, Rubin and Mitsuzuka met with U.S. Federal Reserve Chairman Alan Greenspan and Bank of Japan Governor Yasuo Matsushita.
U.S. Treasury spokesman Howard Schloss said Rubin repeated his concerns that the Japanese economy is “weaker than expected and its external surplus increasing.”
But Mitsuzuka went out of his way to reaffirm Japan’s objective of achieving domestic demand-led growth and avoiding a significant external surplus increase, Schloss said.
Japan’s long-suffering economy was supposed to recover in 1997, but a tax increase has decreased domestic consumption. The nation continues to rely on a relatively weak yen to drive forward its booming export market.
At the same time, the U.S. deficit with Japan surged 27.3 percent to $5.2 billion in July, the worst performance since June 1995. A main reason was a flood of Japanese cars.
That prompted some U.S. officials to express impatience with Japan and call for greater efforts to lower Japanese barriers to U.S. products. Rubin had been expected to sharply criticize Japan during the economic get-together in Hong Kong.
But after Saturday’s meeting, Mitsuzuka said, “We generally received understanding that we are in the midst of undertaking major structural reforms, which would solidify the base for sound economic growth.”