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Ambassador Howard H. Baker's Speech at the Japan Center For Economic Research
Hotel New Otani
September 19, 2002
Tokyo, Japan
Good morning. Mr. Chairman and gentlemen, I thank
you for inviting me to speak this morning. I appreciate your coming out and
giving me this chance to participate in your program, to make these remarks, and
then to try to answer your questions. And perhaps you can answer some of my
questions. But in any event, I must say that in the preliminaries to the
breakfast I had a chance to meet with some of our friends, and I have declared
that we have covered all the questions. There's no need to ask any more
questions. We've answered them all.
My friends, it was my privilege to travel to the United States last week to
be with President Bush and Prime Minister Koizumi in New York in advance of the
President's speech to the United Nations, and, of course, in advance of the time
when Prime Minister Koizumi made his historic visit to North Korea. It also
coincided with the commemorative ceremonies in New York for the terrible events
that occurred on September 11. My I take just a moment on behalf of the American
government and the American people to offer my thanks to the people of Japan for
the sympathy and support that they showed to us in the wake of September 11. It
was truly remarkable, and it was most impressive.
I think there has been no recent example of the proof of the friendship of
our two countries than the way Japan reacted to the terrible tragedies in New
York, Washington and Pennsylvania on September 11 of last year. Indeed, nothing
has impressed me more during my time as United States Ambassador than the
genuine and heartfelt expression of sympathy from the Japanese people, who so
clearly experienced the same sense of shock, of outrage, and indignity that we
suffered in America. I would like also to offer my gratitude to the Japanese
people for standing in solidarity with the people of the United States as we
began dealing with that tragedy.
In the days following the attack, thousands of Japanese citizens visited the
Embassy of the United States to show that support. They left floral tributes.
They left flowers in great abundance, unsolicited, uninvited, at the gates of
the U.S. Embassy. There was a mountain of floral tribute there over the course
of many days. We were greatly impressed and touched. The thought occurred then,
what do we do in recognition of this outpouring of sympathy and support? How do
we acknowledge these tributes by the people of Japan? What we chose to do at the
American Embassy was to plant a tree in commemoration of September 11, and in
appreciation for the support and sympathy of the people of Japan. We gathered up
the floral tributes-the flowers-and in a traditional way we had them incinerated
and reduced to ashes. Then those ashes were used in connection with the planting
of that memorial tree, thus, in my view, adding to the significance of occasion,
and the importance of the symbol.
My friends, we live in dangerous and difficult times. We are allies, but as I
say, we are friends as well. We share each other's grief, whether for September
11 or for the fate of Japanese abductees in Korea. We watch with great interest
as we are briefed on the results of Prime Minister Koizumi's historic trip to
North Korea. We watch with great anticipation the unfolding of the future of the
relationship between Japan and North Korea, and then, of course, between North
Korea and the rest of the world. You have a very special opportunity in Japan,
and I believe a very special responsibility to help lead the world in defining
what that relationship should be. You are close by. You are in the neighborhood,
so to speak. You know more about North Korea than we in America. You understand
the region better than, perhaps, we ever will. So you have a special leadership
role in defining these new relationships, and we in America look forward to the
wisdom and judgment that you'll exercise as that unfolds and develops.
My friends, the response of the Japanese nation was more than just an
expression of sympathy. It was also very real, for you responded quickly and
decisively to join us in the war against terrorism. Indeed, within days of the
attack, Prime Minister Koizumi pledged "maximum support" for the
United States and its war against terrorism. Throughout the past year, the
Japanese government has carried through on this firm commitment by working
together with the United States and other like-minded nations to tackle the
unprecedented challenge that is before us. The Japanese Self-Defense Force has
offered rear-area support, and perhaps the most visible contribution has been
the participation of your Maritime Self-Defense Forces as they steamed away from
this nation in support of our efforts to fight terrorism-but fully within the
confines and restrictions of your Constitution.
In addition, Japan has quickly moved in other areas. You have helped block
terrorist funding… you have increased vigilance at harbors and airports…
and, of course, offered to rebuild a devastated country-Afghanistan. Prime
Minister Koizumi reiterated his sympathy and support at the recent summit. As
President Bush said last October, the United States has no greater friend in the
war on terror than Prime Minister Koizumi.
In the wake of the September 11th attack, there were dire predictions for the
international and the U.S. economies. But both economies, my friends-yours and
ours-proved resilient indeed. The U.S. economy recovered from the immediate
shock to grow 2.7% in the fourth quarter of 2001 and 3.1% in the first half of
this year.
Yet we know that the recovery is fragile. Stock market losses and high
profile corporate accounting scandals have again given rise to doubts about the
direction of the U.S. economy, but we believe that our economic fundamentals
remain strong, and the recovery appears to be well on the right track. The
United States Government has moved rapidly to forestall a further slowdown.
President Bush has instituted growth-oriented tax cuts, and remains committed to
spending restraint. Our Federal Reserve Board aggressively cut its target
federal funds rate eleven times in 2001, and is holding down interest rates in
our country. Given the lags in the effects of monetary policy measures, these
reductions should continue to provide stimulus well into the next calendar year,
encouraging growth in personal consumption expenditures and residential
investment.
Robust growth in the pace of business investment provides the key to a
sustained recovery. Thanks in part to the Bush Administration's removal of
disincentives, business investment in our country has already shown signs of
firming and growing.
The U.S. Government has moved swiftly to restore confidence in American
companies and in their governance. The President outlined a ten-point plan to
improve corporate responsibility and provide incentives for prompt, clear
disclosure of relevant economic information. Congress and the Securities and
Exchange Commission have both taken steps to restore investor confidence and
improve business accountability in the United States.
I expect it will take some time for these measures to fully restore
confidence, but the speed with which they were undertaken is already boosting
our economy. More importantly, these scandals show that corporate governance
reform requires a continuing and sustained effort. The government and
corporations must remain vigilant to prevent or repair-forthrightly and fast-any
corporate misbehavior, be it falsified books, unusual stock transactions, or
mislabeled products.
It is our ambition in America to be not only the most vibrant economy, but
also to have the most responsible, transparent, and effective corporate
governance in the entire world.
One trend that we have seen in the United States, but also here in Japan, is
a movement of capital into less risky assets, such as government bonds. Unless
we focus more on innovation and risk taking to create new business opportunities
in sections with high growth potential, we risk stifling those sectors that will
sustain growth. Many of the U.S. measures I have already mentioned-including tax
cuts, investment incentives, and market confidence boosting measures-will in our
judgment promote entrepreneurial activity and risk-taking.
While these measures are not an exact prescription for Japan, they have
worked well in the United States. They offer great promise for an improved
climate, enhanced activity in our corporate and economic sector, and we
respectfully suggest that they have relevance to the situation here in Japan as
well.
I believe that the Prime Minister remains committed to reforms that will turn
around the Japanese economy. The Japanese Government, as Prime Minister Koizumi
has himself said, should emphasize financial problems such as non-performing
loans, as well as ending deflation and accelerating structural reforms. Tax
reforms specifically focused on permanent, significant cuts in tax rates would
increase incentives for investment and for risk-taking. The resolution of the
loan problems would free up unproductive capital, labor, and land for areas with
greater growth potential. Structural reforms to lower costs would increase
Japan's global competitiveness. Improved corporate governance would attract
increased investment in financial markets, providing Japanese firms with more
financing options. My friends, I remain confident that the Japanese economy will
retain enormous potential provided that the government and people of Japan push
ahead with their ambitious program of reforms.
As both our countries implement reforms to boost economic growth, we must
work together to help our partners. Trade liberalization and facilitation boosts
growth. I believe the United States and Japan, as the world's two largest
economies, must move forward in trade liberalization efforts. President Bush has
recently obtained authority, the Trade Promotion Authority Act, to negotiate and
conclude global trade talks and free trade agreements, which signals the United
States' commitment to expanding world trade. We look forward to working with
Japan to promote regional and global trade liberalization.
My friends, I do thank you for the opportunity to be here. There are many
issues that confront our two nations. The greatest guarantee of the success of
our efforts to lead the world in peace and prosperity may be centered on the
cooperation and friendship between America and Japan. My predecessor, Ambassador
and Senator Mike Mansfield, was found of saying, and saying often, that the
bilateral relationship between Japan and the United States is the most important
bilateral relationship-bar none. Mike was right in his time and what he said is
right today. So we have an obligation, my friends, to understand each other, to
work together, and to cooperate in this business of providing security and peace
and mutual prosperity.
Thank you very much.
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