U.S. State Department Geographic Bureaus: East Asia and Pacific Bureau



JANUARY 9, 1995

MS. SHELLY: Good afternoon, ladies and gentlemen, welcome to the State Department briefing. As I think most of you know, the Japanese Prime Minister, Mr. Murayama, will shortly be arriving in Washington and will be meeting with the President on Wednesday. The President and the Prime Minister will discuss a broad range of issues which affect our bilateral relationship ranging from security to global cooperation and, of course, trade.

I thought it would be very useful as a kind of scene-setter for this if we had our Assistant Secretary for East Asian and Pacific Affairs, Winston Lord, who is certainly well and favorably known to you, to come down and talk to you today about this visit and about the U.S.- Japanese agenda. After that, I'll be happy to take your questions on other subjects.

So without any further ado, I pass the microphone to Assistant Secretary Lord.

Q ASSISTANT SECRETARY LORD: Thank you, Christine. Why don't I open up with some of the major themes that we expect to flow during the summit, and then I'll be glad to take your questions.

This visit continues the tradition of the Japanese Prime Minister visiting Washington fairly early in his tenure. This will be the third meeting between Prime Minister Murayama and President Clinton. They met last summer at Naples at the G-7 summit, and they met in November in Jakarta and Bogar at the APEC leaders' meetings.

They will be meeting in the White House. I'll give you details on this, but there will essentially be both a meeting and a working lunch on Wednesday, late morning/mid-day. Tomorrow afternoon here in the State Department, Secretary Christopher will meet with Foreign Minister Kono of Japan.

Nineteen ninety-five marks the 50th anniversary of the end of the Pacific war. We will, of course, be honoring our veterans throughout this year, but we also want this anniversary year to be forward-looking and one which pays tribute to the major contributions to world and regional peace and security made by the U.S.-Japan partnership, which is very broad and which is important not only to our two countries but, as I've indicated, to all of the Asia-Pacific region and, indeed, the world.

The strength of the U.S.-Japan security alliance reflects the enduring American commitment to peace, stability, and prosperity in the entire region. So the security dimensions will be an important topic.

North Korea will be a very important topic as well. I'd note that Japan has been very strongly supportive of the efforts we've made to deal with North Korea on this issue. We consulted very closely with them as well as South Korea, in particular, on this subject. Japan, of course, has welcomed warmly the agreement we reached and we're now working closely on implementation.

Currently the U.S., Japan, and South Korea are engaged in a close, cooperative trilateral effort to establish the Korean Energy Development Organization, or KEDO, an integral part of that agreement. Indeed, trilateral expert talks are continuing today and for a couple days this week here in Washington.

A third very important topic will be our trade and economic differences with Japan. On the one hand, we've made some progress in resolving some of these differences. On the other hand, considerable work remains ahead. It's unfinished business.

On the positive side, there's been a series of stimulus packages by Japan over the last couple of years to stimulate their economy and imports. Also Japan is extending its recent tax cut decision and postponing tax hikes so as not to offset the stimulative effect of these fiscal measures.

With respect to sector agreements, I won't go into every last one, but there have been a series of agreements reached over the last year or two in the wake of the framework agreement that we settled upon a year and a half ago: Government procurement and telecommunications and medical technology, the insurance sector, cellular telephones, apple imports, rice, construction, intellectual property rights, glass, and we're currently making very good progress, indeed, on agreement in the financial services area.

On the other hand, there's a lot of work still to be done. We will continue to put considerable emphasis in this area.

The deficit, both with us and with the world, continues to be persistent -- over $60 billion with us; roughly $130 billion global current account surplus for Japan. I would note that the stated goal in the framework agreement was a "highly significant decrease" in the current account surplus and "significant increase" in global imports of goods and services. So we've got to get at these deficits even as we continue to make as many agreements as we can.

A particularly important area, of course, because it accounts well over half of our deficit with Japan, are autos and auto parts; deregulation is another important area -- just to single out two -- that we'll be working on with the Japanese. Of course, it's very important that we implement very carefully what's already been agreed upon.

A fourth very important area in our relationship generally this year and at the summit will be the role of APEC. All of you are familiar -- many of you were present in Indonesia so you know the background of this important regional organization.

A strong leadership by President Clinton in Seattle and by President Soeharto in Jakarta and Bogar produced the visionary Bogar Declaration for trade and investment liberalization by a date certain. Japan this year will be the host. The next leaders' meeting and ministerial meetings will be in Japan; the leaders' meeting in Osaka in November 1995. We look forward to supporting Japan, as chairman, working closely with it. We look to Japan to provide the same kind of dynamic leadership we've seen in the last couple of years in preparing a comprehensive blueprint to carry out the vision of Bogar.

Another very positive area of our relationship with Japan -- in fact, it hasn't gotten that much attention -- is the common agenda, or the remarkable cooperation under this heading which we're working together to tackle a series of critical global issues, including the environment and technology. There's a Population and AIDS programs we've agreed between us to provide some $12 billion by the end of the century. Japan has agreed to $3 billion of new money in the last year or so. Also working on other issues like narcotics, childrens' health, and a new initiative on women and development.

Finally, I would note that we would hope that the very important student exchange would be enriched, particularly getting more American students studying in Japan. I know Ambassador Mondale has particularly emphasized this in terms of the future health of our relationship.

So that briefly are some of the major themes that I expect the two leaders and, indeed, the Foreign Ministers, who will also go into some other issues as well, will be covering in the next couple of days. I'll be glad to take some questions on this.

Q How are you doing in financing of the energy package to North Korea, the divvying up as to who provides how much?

ASSISTANT SECRETARY LORD: As I suggested, those talks at the Expert Level -- in this case, headed by my Deputy, Thomas Hubbard, who has recently, as you know, been to North Korea -- are continuing, even as we speak, with the Japanese and the Koreans. We expect to make further progress in the next couple of days.

We've already had two good rounds of talks at this level, and Mr. Gallucci also joining those talks. We're making good progress. The three of us are sort of the central players in KEDO. Once we've worked out the structure of KEDO and the financial arrangements, then we expect it will encourage much broader international participation.

But it's fair to say that Japan and South Korea support the agreement strongly and the establishment of KEDO, and we've made good progress in figuring out who provides what.

Q What is the atmosphere after the release of Bobby Hall and all that went into that? What is the atmosphere for the implementation of the framework agreement? And will the oil be delivered on time?

ASSISTANT SECRETARY LORD: The oil will be delivered on time. Namely, we're committed under the Agreed Framework to have that delivered on January 21. Those plans are going ahead.

I think the atmosphere is solid. It depends what you're talking about -- the Congress, Korea, Japan, and so on.

There's no secret that if the Bobby Hall incident had dragged on a great deal longer that this could have had serious implications for implementation of the agreement. Frankly, this point was brought home by us and even more bluntly by the Congress, which was very helpful on this subject.

As you know, Bobby Hall, in our view, was held too long. But he did get out; we welcome his release, and I don't think the atmosphere has been affected.

For its part, North Korea is meticulously implementing the agreement so far: Whether it's full inspections, as required by the IAEA, freezing all its construction of nuclear reactors, shutting down its small nuclear reactor, sealing the reprocessing facility, undertaking talks on how to encase the spent fuel rods with the eventual shipping-out from North Korea.

Just today, we've seen wire reports that they're lifting their economic and financial restrictions, vis-a-vis the United States -- that is, North Korea is doing that. So with respect to North Korea's performance, that continues to go ahead. We will watch that closely. It's based on verification, not on trust.

South Korea: Continue close consultations. We think it's extremely important that the North-South dialogue be resumed. That is one of South Korea's primary concerns which we share.

As for Capitol Hill, of course, the agreement will come under close scrutiny. It should. It's very important for our security. It's quite complex. It's also a terrific deal. The more Congress looks at it, the more they'll like it.

Q Is there any prospect for that North-South dialogue to begin?

ASSISTANT SECRETARY LORD: I would say no immediate prospect. But we're talking both to the South and we'll be talking to the North about the need for that to happen. It's stipulated in the Framework Agreement. We've made it clear that we expect and want to see parallel South-North talks going on even as we move ahead with the implementation of the agreement.

Q Can I take you back to Japan for a minute? What events is the United States planning to commemorate the 50th anniversary this year, and will Prime Minister Murayama be invited to any of them?

ASSISTANT SECRETARY LORD: For the details I would refer you to -- a special operation has been so ably handling this both in Europe and Asia and elsewhere under General Kicklighter's direction and the Pentagon generally. So I'd rather not get into specific details.

There will be continuing commemorations. I was at the one at Leyte with Secretary Perry, for example. I understand there will be some plan this year for Iwo Jima, Okinawa. The President is probably going to go to Honolulu for some veterans' observations. But all these details are yet to be worked out, and I would refer you to General Kicklighter or the White House for further details.

Q What about Prime Minister Murayama?

ASSISTANT SECRETARY LORD: In terms of foreign participation and levels and so on in various activities, these all still have to be worked out.

Q Could I follow that one? As part of the 50th anniversary, would you expect to see Japan to be offered a permanent seat in the Security Council?

ASSISTANT SECRETARY LORD: We would personally -- not personally -- as a nation be delighted. We have through seven administrations and very strongly in this administration argued that Japan should be a permanent member of the U.N. Security Council. There's a committee looking at that, I believe, now at the U.N.

It is a complex question and who else might get in and various powers, and so on. So I don't want to predict how soon that will happen. I don't have any evidence it's going to happen that quickly, but we certainly support it.

Q That means quickly this year?

ASSISTANT SECRETARY LORD: I don't have any evidence to that effect it will move that quickly, but I don't want to rule anything out, and we certainly favor it.

Q Is there anything that you are suggesting the Japanese do in terms of foreign aid or peacekeeping to bolster their own case?

ASSISTANT SECRETARY LORD: We don't believe in sort of specific, precise linkage or criteria. I think there are some general criteria which should be self-evident, and we think Japan meets those criteria. It's an extremely important country, particularly in the world economy, and we believe it's been stepping up to its global responsibilities, which is also very relevant.

I would note not only its large foreign aid program -- its participation in important issues like the Korean Nuclear Agreement that I just mentioned -- but its increased role in peacekeeping. First of all, it's been a major supporter of the Cambodian peace agreement. It's sent observers there. It's been involved in Mozambique. It's been involved in Zaire, in Somalia, Middle East Development Bank it hopes to play a role. And it's, of course, had individuals that have been heavily involved under U.N. chairmanship. So we think for all these reasons, Japan has earned the right to be a permanent member.

Q Mr. Secretary, are the two leaders going to talk about Chechnya issue in Russia, and how they should cooperatively approach the soon and peaceful solution to that?

ASSISTANT SECRETARY LORD: Again, I don't want to pretend I can prescribe exactly what's on the agenda for each meeting. I would certainly in the course of the discussions over the next couple of days -- both the Foreign Minister discussions and the leaders' discussions -- assume the situation in Russia and Chechnya would come up. Japan has a very important relationship and a complex one historically with Russia, so there's that general issue.

And a specific one, I would imagine since that is such a vivid issue right now, that would also come up. But I don't know about any particular coordination, but certainly an exchange of views on what's happening and its possible implications.

Q Secretary Lord, this is somewhat off the subject, but do you -- there are reports this morning that Deng Xiaoping was in the hospital. Do you have -- can you confirm this?

ASSISTANT SECRETARY LORD: No, I can't confirm that. For many years -- he's advanced in age -- there have been various reports, some of which have proven less than accurate, of his status. I believe there was a report he's the hospital and other elaborations, and then that report in turn was denied. But I'm not exactly sure what the various organs were that first put out the report and which denied it, but I've seen those. So I can't confirm or deny what you're suggesting.

Q Secretary Lord, do you have any -- do you expect there will be a declaration when Prime Minister Murayama comes here for a meeting with the President?


Q A declaration in light of the fact that this year is the 50th anniversary of the end --

ASSISTANT SECRETARY LORD: I don't know about any specific declaration. I'm sure there will be an opportunity for the leaders, at least on their own, to make comments to the press. But the precise arrangements I would leave to the White House.

Certainly, the themes, I think -- and we've been talking to our Japanese friends, of course, in advance of the summit -- will include the ones that I've mentioned and include the fact that we want to use this year, the anniversary, to look forward how far we've come in these past 50 years; the reconciliation of our two countries, the great potential of this relationship for the future, much of which is already being realized and which we want to expand upon.

Q Secretary Lord, can you talk any more about the -- you made a passing reference to the wire report you've seen about North Korea ending its ban on trade or financial transactions.


Q (A) Is that the way you expected to find out about this, and (b) what would that mean if it were, in fact, true?

ASSISTANT SECRETARY LORD: I never know whether we expect anything. We do expect meticulous implementation of the agreement, but that's based again on verification and specific steps in the agreement, not on trust. So far, as I said, North Korea's record has been very good.

It was envisaged under the agreement, and indeed it stipulated, that by January 21, each side would begin to take some steps in this area. North Korea has moved out in advance of that date unilaterally. That was the first we heard of it -- at least the first I heard of it. And it appears -- again, I haven't seen more details -- that it's a fairly sweeping lifting of restrictions across the board.

We in turn envisage taking some steps on our own, but the nature of those still have to be worked out.

Q What would it take -- what more would it take for the North Korean side to earn a response and what kinds of steps do we have --

ASSISTANT SECRETARY LORD: It was always envisaged -- we have a series of economic, not to mention diplomatic, restrictions on our relations with North Korea which have been built up over many decades for reasons that are familiar to all of us. We've never pretended nor is it obligated under the agreement to sweep all these away within a matter of months.

We do hope, as part of the agreement and depending on the faithful implementation of the agreement, that we can move ahead with a better relationship with North Korea, even as the South-North dialogue we insist also goes forward. So that would include, and indeed we're obligated -- assuming they implement the agreement -- the loosening of financial and economic restrictions; and, I say, we would envisage some of that taking place on our part by January 21, but I can't tell you what those are going to be at this point.

Q Secretary Lord, does this mean that U.S. businessmen can go to North Korea, according to the North Koreans, but not according to the United States?

ASSISTANT SECRETARY LORD: Based on wire reports, and so on, I just don't want to mislead you with precision at this point. It may be that the Treasury Department or Commerce can give you more details specifically, but we have not taken any steps yet of our own. The North Koreans apparently have. But I don't want to get beyond that level of generality until I can see more details.

Q I have another question. We have been told that the United States is not going to pay for these $4 billion reactors; that we're going to get the North Koreans -- the South Koreans and the Japanese to bear the brunt of this burden. Is that still the case?

ASSISTANT SECRETARY LORD: You have to look at the KEDO organization. It's covering many areas. You're referring primarily to the light-water reactors, but we're talking about alternative fuels, and indeed the U.S. is stepping up with the first shipment that we're responsible for on January 21.

The headquarters and startup costs of KEDO itself; there's a cost of taking care of and removing the spent fuel rods. So there's a lot of elements for contributions. The U.S. does plan to make contributions in many of these areas, and we expect South Korea and Japan to make -- because of their very direct interest to make very significant contributions as well.

But the exact details of who's doing how much in each of these areas is precisely the kind of issues that we're now discussing and will discuss with a wider circle of countries once we have a rough agreement among the three of us.

Q Can I just follow up on that? Correct me if I'm wrong, but I get the impression from your remarks that you're rolling back somewhat from the initial representation that South Korea and Japan would bear the lion's share of this estimated $4 billion light-water reactor project. Is that true?

ASSISTANT SECRETARY LORD: No, it's not true, but I don't want to be trapped with sort of catchy sound-bite phrases. That's my problem. So without necessarily endorsing --

Q Just between you and us.

ASSISTANT SECRETARY LORD: Just between -- (Laughter). That's very good.

I think it's fair to say that it's clear already from South Korea that they expect to play a very central, if not leading, role in the light-water reactor side which they consider in their own self- interests, but we will also play a role in the management of this whole exercise, and Japan will also. I don't want to start using adjectives here, because I think this is up for the leaders of the respective countries to state.

But, of course, we see South Korea and Japan as playing very, very important roles. So no, our position hasn't changed in that. We've always felt it would be useful and indeed important to have participation by others -- if not in this area, then other parts of KEDO -- and we're going to be working hard on that. But clearly the three of us have the most direct interest in this area.

Q Senators, I think, Pressler and Murkowski said that when you start with a program that's going to cost $4 million, it ends up costing $4 billion. Is this what's -- is this a sort of -- is there any estimate of how much this is going to cost us?

ASSISTANT SECRETARY LORD: It's not precise estimates. For the light-water reactor part of it, $4 billion is the rough figure that have been used so far. That will be refined over time, but let's keep in mind here what's involved. Obviously, money is extremely important, and we're very sensitive to this, and we believe that we have made a major contribution already diplomatically. We make a major contribution with the stationing of 37,000 American troops, and we'll make contributions to KEDO. But we believe the U.S. is already playing a central role.

We will consult closely with Congress as we move ahead, including on the financial aspects. But again this deal and several billion dollars, whatever it is, born by the international community, generally is a very good deal indeed. I will not walk you through the entire agreement now, although I'm sure you're anxious to hear all my arguments. But the fact is that we already have frozen under tight international and national surveillance, North Korea's nuclear program, which was dangerous for proliferation and which was on the verge of being able to produce plutonium and then nuclear weapons consisting of dozens every year as we look to the next several years.

That's already frozen, and at the end of this process of many years, they will dismantle this entire proliferation -- dangerous technology for proliferation. That is well beyond NPT obligations on behalf of North Korea. It is frankly beyond even our original objectives. In exchange for that, we, together with the international community, will provide alternative fuels and alternative technology over many years to compensate for the loss of energy that North Korea will suffer as a result of abiding by this deal. We think that's a very good deal indeed.

Furthermore, the integration of North Korea into the international economy and their increasing dependence on others for energy, hopefully will make for a more stable situation in Northeast Asia.

Q In taking your arguments into account, is this conceivable that this could cost the United States more than a billion dollars?

ASSISTANT SECRETARY LORD: First, let me say we seem to be drifting away from Japan, which is why I'm supposed to be up here, so I really would like to return to that subject if I could. But my desire to return to that subject should not suggest that we're going to be anywhere close to the kind of figures that you're citing.

Q One more question on another trip. On Vietnam. If memory serves me --

ASSISTANT SECRETARY LORD: What is Japan's relations with Vietnam, right? (Laughter)

Q If memory serves, the United States and Vietnam were to exchange diplomatic offices by the end of the year. What is holding that up, and when should we expect that to happen?

ASSISTANT SECRETARY LORD: We're in very good shape on that. We're at the technical cleaning up stage. We initialed agreements in December. Frankly, it's now down to a matter of when precisely we will -- I mean, all the property and claims issues relevant to this -- opening up liaison offices, I might add -- have been resolved. To answer your question directly, I would be surprised if we didn't actually open up the liaison offices for business in the course of this month.

Q In terms of the summit with Murayama, is the United States looking for a specific commitments regarding some of the more troublesome issues in the trade relationship? Do we want specific targets in any of these sectors?

ASSISTANT SECRETARY LORD: We will underline, as I said in my opening remarks, the ongoing importance of the trade and economic factors, even as we highlight the very positive aspects of our relationship. So we're trying to strike a balance here. We want to be clear that the economic dimension remains very important. It's also important that everyone recognize in the region and in both countries we have these positive elements.

I don't envisage specific negotiations at the leaders' level. I would hope that the general commitments to further progress will help produce agreements in some of these areas of progress in the near future. We have agreed, for example, to resume auto negotiations later this month. We are making good progress on financial services.

Sometimes an impending meeting like this at the highest levels does induce progress by the bureaucracy. I think that's been happening in a couple of areas, and we would hope that the fallout from this meeting would induce further progress. But I don't want to rule out any specific agreements, they may occur in the next couple of days, but that's not our specific purpose.

We're trying to make progress generally in the relationship, including in this area, so that we can have and continue to have a series of agreements and get out these deficits over time.

Q Would you expect the financial services agreement to be announced on Wednesday?

ASSISTANT SECRETARY LORD: Again, I would refer you to Treasury on that. I know we've made very good progress, but whether it will be announced by Wednesday, I really think Treasury would be in the best position to tell you on that.

Q The efforts put a positive spin on -- more positive spin on relations with Japan. Is this an acknowledgement by the Clinton Administration that perhaps over the past two years you've been a little narrowly focused on trade and more heavily handed in your emphasis on trade than perhaps might be to the good --

ASSISTANT SECRETARY LORD: Of course, we're not going to acknowledge that, both because it would be bad public relations but also wouldn't be true. The fact is we have been dealing with a lot of other aspects of our relationship, and we think whatever frictions have arisen in some very tough negotiations -- that's the nature of the negotiations with a good friend like this and so much interdependence -- they have not spilled over into the other positive aspects of our relations.

I will say this in all candor, that I do think that there has been a lot of public emphasis on the trade dimension alone. On the one hand, that was very important to us, because we said at the beginning of this administration that the relationship is in pretty good shape on the whole -- it's a very rich partnership -- but the part that needed fixing the most was the economic and trade dimension. That is still the case, although we've made progress.

So some emphasis on economics and trade is not only inevitable, but we would say healthy. But I think it is fair to say that both sides believe that this has perhaps gotten more negative emphasis than either would have preferred. We want to make sure that everyone understands that on the one hand there are many other positive aspects to our relationship, and we do want to emphasize those -- security in Korea and APEC and some of these other issues. And on the other hand without implying the premise of your question -- namely, that we're going to in any way slacken our efforts to get at these persistent emphasis and open up the market.

MS. SHELLY: Last question.

ASSISTANT SECRETARY LORD: I should get someone who hasn't had one. I think you've had one. I don't think you have.

Q Thank you. Do you want or are you persuading South Korea to exclude the expression of Korea (inaudible) on the KEDO contract in order to consider the case of North Korea?

ASSISTANT SECRETARY LORD: I don't want to get into specific formulations. That's still being worked out in the kind of talks that I mentioned that are taking place now. It's very clear, as I've said, that South Korea will play a central role in the whole "light water reactor" operation. We've made that clear to North Korea, even as we're willing to get engaged to help push this area forward. I don't want to get into specific stipulations, but clearly the South Korea role, both in terms of construction and finances, will be central.

Q Do we expect a briefing at the conclusion of this round on KEDO?

ASSISTANT SECRETARY LORD: Let's see if there's a sufficient desire. I'll leave that up to my mentor here on whether that seems to make sense, but I'm sure there's nothing in principle that would be against that.

MS. SHELLY: Thank you.


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