June 04,2003

Grassley, Baucus Urge the President to Highlight U.S.-Japan Trade

WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, along with Sen. Max Baucus, ranking member, Rep. Bill Thomas, chairman of the Committee on Ways and Means, and Rep. Charles Rangel, ranking member of the Committee on Ways and Means, yesterday sent a letter to the President urging him to continue to underscore that trade between the United States and Japan is a high priority. Grassley, Baucus and their House counterparts strongly requested that the President continue to work with Japanese Prime Minister Koizumi on important economic issues including Japan’s need to deregulate, reform its banking system and open its markets to U.S.goods, services, and farm products.

The text of the letter follows.

June 3, 2003

The Honorable George W. Bush
President of the United States
1600 Pennsylvania Ave., NW
Washington, DC 20500

Dear Mr. President:

We are writing to respectfully request that you continue to underscore to Japanese PrimeMinister Koizumi that U.S.-Japan trade is a high priority for your Administration and for theCongress. Although we understand that your recent meetings with the Prime Minister includeddiscussions on economic issues, we urge you to press Japan to continue to deregulate, reform itsbanking system, and open its markets to U.S. goods, services, and farm products.

In challenging economic times, it is important for America’s trade strategy to focus on majoroverseas markets that provide the most potential opportunity. Despite recent economic reversals,Japan is the world’s second-largest economy and America’s third-largest trading partner. It remainsa highly affluent society, a huge customer for American agriculture, a powerful global competitor,and accounts for over 70% of Asia’s GDP. Under Prime Minister Koizumi’s leadership, there hasbeen some progress on deregulation and market opening, but there is still a long way to go. U.S.goods, services, investors, and farm products continue to face protectionist trade barriers anddiscriminatory and non-transparent regulations, and U.S. business continues to suffer from Japan’sprotracted economic weakness. Measurable progress by Japan on non-performing loans and long awaitedfinancial reforms, and meaningful deregulation and market opening would be a win-winsolution, which would expand markets for American products, benefit Japanese consumers, andaccelerate a Japanese economic recovery. Indeed, spurring a virtuous cycle of reform and growthis the best way of avoiding a downward economic spiral, both here and in Japan.

Strong U.S. leadership is required. While U.S. exports to Japan totaled over $51 billion in2002, this represented over a 21% decline from 2000. Japan is a major customer for Americanagriculture, but U.S. farm exports in 2002 were down 20% from their peak in 1996. In recent years,Japan’s interest in addressing U.S. concerns regarding improving market access for autos, financialservices, flat glass, meat, medical devices, pharmaceuticals, blood products, and telecommunicationsappears to have waned. As a result, the U.S. continues to run substantial bilateral trade imbalanceswith Japan, including a $70.1 billion deficit in 2002. Japan accounted for 11% of U.S. exports in1996, but this has fallen to only 7% today.

We recognize Japan is an important friend and strategic ally. Prime Minister Koizumi is astrong leader who is committed to pursuing comprehensive de-regulatory initiatives that havepreviously been blocked by powerful, protected domestic political interests. As the U.S. and Japanrecognized in launching the Economic Partnership for Growth, meaningful deregulation, financialreform, market opening, and change would create new opportunities for America’s exporters and forJapanese consumers and entrepreneurs.

Further, while we are encouraged by Japan’s engagement in the Doha round of tradenegotiations, we remain very concerned that Japan is not taking the necessary forward-leaning roleregarding several key issues, most notably agricultural reform and elimination of non-tariff barriers.

We strongly request that you stress the importance of Japan’s movement on these issues to the PrimeMinister, and that he should take into consideration the overall benefits to Japan that result fromfurther trade liberalization. Japan will continue to benefit from trade liberalization as long as it takesthe appropriate steps within the Doha round to further open its food and agricultural market as wellas its markets for U.S. goods and services.

Your next meeting with the Prime Minister offers yet another opportunity to expand marketaccess for U.S. products, accelerate Japanese de-regulation, enforce Japan’s commitments underexisting trade agreements, and reinvigorate our bilateral trade agenda.

We look forward to working with you to build a new and positive era in U.S.-Japan traderelations.


Charles E. Grassley 
Committee on Finance

Bill Thomas
Committee on Ways and Means

Max Baucus 
Ranking Member
Committee on Finance

Charles Rangel
Ranking Member
Committee on Ways and Means