


       E X E C U T I V E   O F F I C E   O F   T H E   P R E S I D E N T

	     	  


                            THE WHITE HOUSE

                     Office of the Press Secretary
_____________________________________________________________________


                          BACKGROUND BRIEFING
                  BY SENIOR ADMINISTRATION OFFICIALS


                             June 8, 1993


                           The Briefing Room


	     
3:13 P.M. EDT


	     MR. STEINBERG:  Thank you for coming this afternoon for a 
BACKGROUND BRIEFING with attribution to Senior Administration 
Officials on the framework for Japanese trade.  [Names deleted]
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Let me introduce 
immediately my colleagues and the members of our team.  [Names 
deleted]
	     
	     The purpose of today's briefing is to discuss with you 
the beginnings of the economic framework discussions between the 
United States government and the government of Japan.  [Names deleted] 
... is then going to discuss how we see the framework fitting into the 
overall structure of U.S.-Japan relationships. 
	     
	     [Name deleted] is then going to discuss what we've called 
the basic bargain and the macroeconomic side of our discussions.  
[Name deleted] will discuss the microeconomic side of the framework 
and what we've called the five baskets.  And, finally, I'll make a 
brief conclusion.
	     
	     Before I turn it to my colleague, I really want talk only 
to three topics.  The first is the framework, the second is the 
intent, and the third is to underline what our immediate objectives 
are.  The framework itself, which the four of us -- the five of us -- 
will describe in more detail throughout this briefing -- I just want 
to sort of give you a road map for the discussion -- has two 
substantive sides and it has a joint management approach, and it fits 
within an overall context of the way we see the relationship.  
	     
	     My colleague will discuss the overall context of the 
relationship.  The two substantive sides I've, in essence, all ready 
said is that we feel that there is a need for ongoing discussions with 
respect to macroeconomic policy and with respect to microeconomic 
policy -- there specifically, sectoral and structural issues.  And 
what we've tried to do is create a framework by which we can bring all 
of those together into a context or a structure that allows a 
continuing, ongoing negotiation or continuing, ongoing contact.
	     
	     The second large -- the second piece of the framework is 
what we've called a joint management approach.  As everybody, I 

think, here knows the -- at the meeting between Prime Minister 
Miyazawa and the President in April, they agreed on a twice-a-year 
meeting of the heads of state.  One of those meetings was always to be 
at the occasion of the G-7 meetings.  
	     
	     What we've proposed is that there be -- is that the 
framework will include a management approach or a follow-up approach, 
in which the leaders will discuss the status of the discussions under 
the aegis of the framework and there will be deputies meetings at our 
level prior to the framework -- prior to the leadership discussions so 
that we can bring it up to date, and we can assess where things are.
	     
	     We have two intents with respect of this, and we'll all 
be underlining them, so I'll start.  The first is that broadly what we 
want to do is enhance the quality of the overall American-Japan 
relationship, specifically with respect to what my colleague will call 
the economic leg.
	     
	     Second, we want to create an enduring structure for 
discussion.  Our view is that what we want to do is to bring together 
a set of different discussions which relate to each other and are 
really to impossible to disentangle, together in a way that we can 
integrate them appropriately and correctly.
	     
	     And finally, I'd like to underline our immediate 
objectives.  In the month of June, our objectives and those of our 
government of Japan counterparts are not really to discuss the 
substance, but to put in place a framework under which those 
discussions will proceed.  So therefore, what we hope to accomplish in 
June in the meetings that will occur on Friday and the meetings that 
will likely occur subsequent to that in which the team will go to 
Japan, is to establish this framework as a vehicle for discussion and 
negotiations and communication.  And we would like to be in the 
position in which the President and the Prime Minister can announce 
that at the occasion of the G-7 meetings.  
	     
	     All of that having been said, I'll now turn it to my 
colleague.
	     
	     SENIOR ADMINISTRATION OFFICIAL:  As you all know, 
President Clinton met with Prime Minister Miyazawa here in Washington 
last April and they agreed at that time to set up a new framework and 
a new form of dialogue, in effect to establish a new kind of 
partnership based on mutual respect and responsibility and one that 
would have a longer term vision of our joint role in the global 
economy.  
	     
	     As the President said, and as we have as a working group 
described it, we see the relationship with Japan as, in effect, a 
three-legged stool.  Each of the legs is critical; one of those legs 
is the security relationship.  That relationship we see as very 
strong.  It's been an anchor for our relationship in the Pacific, an 
anchor for pacific stability, and it is very fundamentally important 
to both of us.
	     
	     The second leg of that stool is our cooperation on a 
whole range of global or transnational issues ranging from population 
to environment to issues of health, such as AIDS, for example.  Again, 
there we see a great promise of cooperation, mutual interest, and 
basically a healthy leg of the stool.
	     
	     The third leg of that stool is our economic relationship, 
and that is the one that needs urgent attention.  In order to make 
sure that the overall stool, the overall relationship is healthy -- 
and again, we want to stress it is our most important bilateral 
relationship -- we have to address the economic imbalances. 


	     
	     So the President and the Prime Minister agreed to develop 
a plan to address in a very concrete fashion our economic agenda.  As 
my colleague has said, they have agreed to meet twice yearly.  We are 
proposing that those twice yearly meetings be preceded by a meeting of 
the deputies.  And we have developed a  new framework, which we hope 
will be one for fruitful dialogue, leading up to that heads meeting.  
And I will turn it over to my colleague, who will continue the 
description.
	     
	     SENIOR ADMINISTRATION OFFICIAL:  The overarching 
framework on the economic side is what we call the basic bargain.  And 
under that bargain, we will be asking Japan to do two things:  to put 
in place a series of policies -- in effect, a multiyear fiscal policy, 
or set of policies, demand-led policies which will have the effect of 
reducing Japan's global current account surpluses from the present 
level, which will be 3 percent to 3.5 percent of its GDP this year, to 
substantially lower levels, say, below two percent after a reasonable 
period of time.
	     
	     The Japanese surpluses constitute a drag on world growth, 
and as such, the whole world has an interest in seeing them reduced.  
And, of course, it wasn't too long ago when the Japanese global 
current account was much more reasonable from the point of view of 
this range we're talking about than it is today.
	     
	     Second, that Japan would simultaneously pursue a series 
of policies which would improve the import penetration -- the 
penetration of manufactured imports into its home market, all 
manufactured imports on a global basis, by a substantial amount.  
Japan's level of manufacturing imports, as a share of its GDP, is 
about half that of other industrial countries, and that illustrates 
the dimension, or one dimension of the asymmetry associated with the 
lack of import penetration of foreign-based manufactured goods.
	     
	     On the U.S. side, our commitment would also be twofold.  
First, to complete the job in terms of the rectification of our 
asymmetry, of our imbalance, which, of course, has been our domestic 
deficit, and not just to say that we will reduce that deficit by $500 
billion over five years, but to complete the legislation associated 
with that and to actually achieve it.  And, as you know, that would 
reduce our deficit in terms of its share of our economy by half.  
	     
	     And, second, to continue the historically open markets, 
open market, which has characterized the United States for so many 
years, and which has been of such benefit to the rest of the world, 
including Japan.  Our interest is in opening markets, not in closing 
them.  And we would expect to continue the attitude -- the basic 
attitude toward trade which has governed U.S. policy for as long as it 
has. 
	     
	     With that as essentially the umbrella, I'm going to turn 
it to my colleague, who is going to talk a bit about the macroeconomic 
framework.
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Thanks very much.  Let 
me say a word or two about process and then amplify a little bit on 
the underlying economics.
	     
	     It is anticipated that macroeconomic discussions with 
Japan will continue in the context of the G-7 ministry of finance 
cooperative process; that the heads of state meeting will take stock 
of the macroeconomic situation, the current account imbalance and so 
forth; and that that meeting will, as Bo said, be preceded by a 
deputies meeting at which the discussion at the heads of state level 
on macroeconomic questions will be prepared.

	     
	     The approach we're taking reflects an analysis suggesting 
that there are two critical problems that Japan poses for the rest of 
the world, that Japan is abnormal on two dimensions.  The first, which 
one might refer to as the imbalance problem, refers to Japan's chronic 
global surplus. 
	     
	     Japan's surplus is today the major asymmetry in the world 
economic system, just as the American deficits were the major 
asymmetry in the world economic system in the mid-1980s.  At a time 
when lack of demand is an important restraint on the creation of jobs, 
both in the United States and in Europe, and at a time when the scope 
for fiscal expansion is not what it has been in the past because of 
large deficits, the large -- Japan's substantial soaking up of demand 
through its substantial surplus represents a serious problem for 
economic growth both in the United States and in Europe.
	     
	     The second problem is what one might refer to as the 
penetration problem.  As my colleague indicated, relative to other 
countries, Japan's level of imports of manufactured goods are very 
low, and that remains the case even after one adjusts for a variety of 
respects in which Japan is thought to be special -- the fact that it 
is an island nation, the fact that it has to import its raw materials, 
and so forth.
	     
	     What one finds is that within particular manufacturing 
industries, Japan's trade is much less than that of its trading 
partners.  The United States, European nations, to a substantial 
extent import and export goods, within the same broad industries.  
There is much less of that intra-industry trade in Japan.  And it is 
that which accounts for the very substantial amount of friction that 
is encountered as American firms and firms from other countries seek 
to do business in Japan.  We are seeking Japan's substantial movement 
over the next several years towards internationally normal levels of 
trade as represented by import penetration.
	     
	     I would just conclude by stressing that the objective 
here is to expand trade, not to manage it, and to encourage the 
Japanese government to pursue public policies, government policies, 
that will have the effect of addressing these two concerns about 
imbalance and about penetration.
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Consistent with the 
principles that my colleague has outlined on the macroeconomic side, 
the microeconomic side of the framework can be characterized by two 
broad goals.  First of all, the goal of market expansion, market 
access to Japan; and second, the goal that this access be applied on 
an MFN basis.
	     
	     We have settled on an approach on the microeconomic side 
that is a basket approach; that is to say, we have grouped issues in 
the bilateral relationship with common characteristics into five 
baskets.  An example of a basket is government procurement, where 
bringing together issues that share common elements, we feel that it's 
very important to do so that agreements are not negotiated on as ad 
hoc a basis as at times they have been in the past, leaving, we 
believe, overall to strengthened and more comprehensive agreements, 
and in addition, rationalizing the negotiation process itself and 
expediting its conclusion.
	     
	     The baskets themselves tend to focus on those areas where 
the Japanese government exerts considerable control or influence over 
the issue involved, or where, for a particular sector, the economic 
asymmetry in trade is particularly severe.  As I indicated, these 
agreements negotiated within each basket would be applied on an MFN 
basis.  The agreements in the U.S. proposal would have multiple 
benchmark indicators attached to them in order to 

assess progress toward market access goals.  These indicators can be 
both qualitative and quantitative in nature, and they would be 
multiple in scope. 
	     Last, we envision that these negotiations on the sectoral 
basis would do two things:  They would, first of all, address issues 
that are pertinent to the sectors themselves, including structural 
issues that pertain to those sectors.  In that way, again, leading to 
more comprehensive agreements and increased access.
	     
	     Second, these agreements -- the negotiation of these 
agreements would be quite timebound.  We would envision a very short 
schedule in the negotiating process timed to coincide with biannual 
visits -- or semiannual visits between President Clinton and Prime 
Minister Miyazawa, once at the G-7 and then in the middle of the G-7 
sometime after the first of the year.
	     
	     SENIOR ADMINISTRATION OFFICIAL:  My colleague and I were 
just saying that we need to do this more rapidly so that you all have 
more time questions, so let me conclude quite rapidly.
	     
	     I wanted to discuss three things.  The vision, our 
principles, and I want to make a point about tone and manner.  I guess 
the overall point I want to make is that we see this as the beginning 
of an effort to put in place a broad structure to accomplish real 
change.  We know we're at the beginning of that, but the goals are 
substantial.
	     
	     The vision really is that the in the changing global 
economy there are enormous international issues in which the chances 
of success in dealing with are vastly enhanced if there is a positive 
and productive bilateral relationship between the United States and 
Japan, who together create 40 percent of the world's gross domestic 
product.  And that success is going to be good for American and 
Japanese workers and consumers and good for the rest of the world. 
	     
	     The principles that we'll pursue in following through in 
this are that -- and these are all ones that we've noted; I simply 
want to underline them -- we're interested in more trade not less.  
Everything we do will be multilateral in character.  We intend to 
pursue and we believe in objective benchmarks as a fundamental aspect 
of this framework.  And we are committed to reciprocity so long as 
it's correctly understood, which is that -- and correctly understood 
in the sense that for 45 years the United States has maintained the 
most open economy in the world and, in so doing, has created the 
driver for the rest of the world.
	     
	     Finally, tone and manner.  As we've looked at the last 
several years, I think all of us have been struck by the fact that 
there has been a corrosive nature to the quality of our economic 
relationships.  We hope that in creating a framework of this kind and 
by creating a larger structure under which -- whose purposes are 
understood with clarity on both sides, that we can begin to move away 
from the corrosive nature of the tone that has been struck and strike 
one over time that is much more appropriate to what is the most 
important bilateral economic relationship in the world.
	     
	     That having been said, the five of us are available for 
questions.
	     
	     Q	  When you mentioned the bargain -- it refers back to 
his bargain that he described.  Does this -- should we take this to 
mean that if the tax and deficit reduction plan does not succeed in 
the Congress that this Japan policy cannot go forward?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  First, we think the 
policy will succeed.  Second, that's a new question; that's one we 

didn't anticipate.  I think the fact that we want to underline is that 
this has been an issue and an imbalance in the world economy that our 
trading partners, most specifically Japan, have correctly and 
appropriately pointed to for years.  That is one of the reasons -- its 
impact on our domestic economy was the larger reason, but that is one 
of the reasons why the President has focused so much of his energies 
on dealing with that problem. 
	     
	     If in the worst possible outcome anyone can conceive that 
problem were not dealt with in line with the policies as put forward 
by the President, the imbalance would be there.  We would still intend 
to pursue this policy and to pursue correcting that imbalance.  But on 
a substantive basis you're quite right, that imbalance would be there.
	     
	     Q	  I've heard -- and you have as well -- officials over 
the course of past years call for essentially what you're calling for 
here in this, open markets, reduce the trade imbalance.  Why is 
anything going to happen now, simply because you're calling for it 
again?  You seem to be offering the same things that you have before, 
a continued open market as opposed to the possibility of additional 
protectionist measures.  Why would anything change now?  Why should 
the Japanese --
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Let me open with a 
preamble, make three points and see if my colleagues would also like 
to comment.  The preamble is the following:  These are very large 
economies.  Very smart people have dealt with this issue on both sides 
in the past.  It is unlikely that in some sort of stroke that we're 
going to discover issues that no one else has ever discovered.         

	     We begin by understanding that there is a continuity in 
the way that government policy is made and that we build on the work 
of others.  I think the most fundamental perception of ours with 
respect to all of that is the following:  that the world economy, the 
Japanese economy and our economy have changed in fundamental ways over 
the last decade.  The way in which we dealt with our bilateral 
relationship tended to be on the margin as problems were identified.  
Because in the midst of change, that's what you do.  What we've done 
is try to look over all of that and to create an overall framework 
within which discussion can be carried forward in a different and more 
integrated way.  That's distinction one. 
	     
	     Distinction two is the flip side of the question that he 
asked -- is that this President has proposed a policy which reverses 
the course of the area of economic policy which was the principal area 
of complaint on the course of our trading partners and, specifically, 
Japan.  And, therefore, we enter into these framework discussions from 
a different stance. 
	     
	     The final point is that we've tried to put in place a 
mechanism by which both within the government and outside of the 
government we will manage these issues over time.  And we think that 
it has staying power and we think that will matter.
	     
	     Q	  To follow --
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Wait.  Let me ask 
whether there's any follow-up on -- no.
	     
	     Q	  Is there any "or else" to this at all?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Why don't I -- in order 
to give somebody else a chance to talk, I ask my colleague to respond 
to that point.
	     
	     SENIOR ADMINISTRATION OFFICIAL:  We don't believe it is 

productive to talk about what else, but let me make a few general 
comments, since the "what else" is obviously directed toward Section 
301 and other trade remedies. 
	     
	     The reason for the use of Section 301, the reason for 
enactment of Super 301 legislation reflects extraordinary frustration 
with U.S.-Japan bilateral economic relationship.  

	     
	     We would far rather that our bilateral relationship, 
bilateral economic relationship with Japan be resolved in a positive 
way than through the imposition of other mechanisms such as 301 or the 
reenactment of Super 301.  In our view, it would be an extraordinary 
gain if those mechanisms became superfluous.  The fact is we are first 
embarking upon a process.  We don't have a framework in place.  We 
have not had negotiations under the framework.  We have not had 
agreements put into place.  We have not had implementation of those 
agreements.  And so our domestic law is, of course, our domestic law 
and is available to us.  It is not the direction in which we would 
like to go, but for now, we don't have anything tangibly in place.
	     
	     Q	  Do these agreements that you envision, will they be 
enforcing 301 law, the agreements you are negotiating within the 
framework, will those be agreements that are enforceable under U.S. 
Section 301 law as it's envisioned right now?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  The framework does not 
affect the application of U.S. domestic law, whether 301 or 
antidumping, or any other aspect of U.S. law.
	     
	     Q	  So these agreements would be enforceable under 
Section 301?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  These agreements would 
be enforceable under any aspect of U.S. domestic law.  What we are 
trying to say is that the U.S. views this exercise as a trade 
expansion exercise.  It does not enter into this exercise with the 
intent of closing the United States markets to exports from Japan or 
any other country.
	     
	     Q	  On behalf of autoworkers and computer manufacturers 
and others who may have thought last year and the year before under a 
different administration that we did, in fact, have a framework and 
some agreement and partial implementation, have we taken now one or 
two steps backwards?  And when can they look for increased access in 
Japan's markets?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  I don't think there's 
any question that what we're doing here should be talked about, should 
be thought of as a step forward.  First, we're putting the economic 
element in the Japanese relationship in an absolutely central well 
beyond where it has been in the past.
	     
	     Second, we're doing it in a way that provides for a 
common government unified structure for addressing concerns.  
	     
	     Third, we've made clear our commitment to measuring 
results as we implement our trade policy through the use of multiple 
benchmarks.
	     
	     Fourth, we've stated overall objectives that we will be 
working towards with the Japanese both in terms of their imbalances 
and in terms of penetration.  This is not a retreat from the existing 
tools of U.S. trade policy.  This is a framework within which those 
tools can be applied in order to ensure that we make as much progress 
as possible in opening Japanese market and, more generally, in 

expanding opportunities for trade with Japan.
	     
	     Q	  But unless I misunderstand, which I may well, you're 
still only talking about a framework.  You're not talking about 
implementation, agreements.  
	     
	     SENIOR ADMINISTRATION OFFICIAL:  What we're here 
previewing for you is the -- is as my colleague said, the Prime 
Minister and the President agreed to set up a framework within which 
these various questions could be discussed.  We're having a meeting, 
as we've told you, to reach a process to reach agreement on that 
framework.  And what we are previewing is the U.S. proposal for that 
framework.  That's exactly right.
	     
	     Q	  Could you explain to us how is it crimping U.S. and 
worldwide growth?  How is Japan's trade surplus crimping global 
growth?  What have your G-7 partners specifically told you about this 
plan and are they on board?  Will you present a solid front in Tokyo 
in July?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  This is a proposal for 
redefining the U.S.-Japan economic relationship.  It is not a G-7-
Japan proposal.  Japan's global surplus crimps growth because it means 
that in a case of each of Japan's trading partners Japan is supplying 
more goods than it is demanding and that is reducing the demand for 
goods in the American economy, in the European economy, and that 
reduction in the demand for goods in turn reduces the level of 
production and the level of employment.  Reducing that surplus is an 
important vehicle for providing increased aggregate demand, which in 
turn creates jobs both in the United States and in Europe.  We don't 
have the room for fiscal expansion because of large budget deficits.  
The Europeans don't have room for fiscal expansion because of large 
budget deficits.  Japan has a substantial shortfall relative to its 
capacity to produce and still has a budget surplus.  And so it does 
have the room to expand demand and drive the world economy forward.
	     
	     Q	  Aren't you really saying that Japan's loss is the 
world's gain?  Isn't that what this is coming down to?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  I don't think this has 
anything to do with Japan's loss being the world's gain.  Japan's 
consumers have the possibility of benefiting very substantially from a 
period of domestic demand-led growth.
	     
	     Q	  What sectors are covered by these benchmarks?
	     
	     Q	  What's the basket?  What are the five sectors?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  The five sectors are, 
first, government procurement by Japan; second, regulatory reform and 
regulated industries; third, Japan's automobile and automotive parts 
industry in Japan and in the United States; fourth, U.S.-Japan 
economic integration -- for example, intellectual property rights; 
fifth, compliance with existing agreements and arrangements.
	     
	     Q	  Could you give us some examples --
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Let me say, these are 
contained in the U.S. proposal.  They are obviously not agreed to.
	     
	     Q	  Could you give us some example in the area of 
government procurements, how to --
	     
	     SENIOR ADMINISTRATION OFFICIAL:  I can give you a few 
illustrative examples.  In government procurement, for example, 
computers and telecommunications.  With respect to regulatory reform 

and regulated industries, financial services, for example, including 
insurance.  The third basket is self-explanatory.  The fourth, on 
economic integration, I've given the example of intellectual property 
rights -- technology transfer  is another example.  And then the last 
basket, compliance, we have, of course, a number of outstanding 
agreements and arrangements with Japan, compliance with which is high 
on the agenda, as well as a reassessment of those agreements and 
arrangements.
	     
	     Q	  Can you give us some examples of the benchmarks you 
have in mind?  Qualitative and quantitative.
	     
	     SENIOR ADMINISTRATION OFFICIAL:  We can only, at this 
juncture, speak of benchmarks in general terms.  We envision multiple 
indicators, both of a qualitative and quantitative nature, that would 
apply to various of these agreements.  For some agreements, obviously, 
quantitative indicators might be more appropriate to that agreement.  
For others, qualitative indicators might be more appropriate. 
	     
	     The point is simply that if we are to assess progress 
toward market access we would like to have some objective benchmarks 
against which to assess that progress.  To the extent progress is not 
made, that may indicate any one of a number of things including having 
negotiated the wrong agreement.
	     
	     Q	  Are you talking quotas?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  We are not quotas, no.
	     
	     Q	  Can you give an example of a qualitative benchmark?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  A qualitative benchmark 
might be, for example, in the case of a sector where one wanted to see 
substantial process change; a comparison, for example, U.S., European, 
Canadian, Japanese laws and to try and regularize the Japanese regime 
more in line with other industrialized nations.  That would be one 
example.
	     
	     Q	  In the auto sector, I believe that comprises a very 
large part of the U.S. trade deficit with Japan.  How specifically 
would you propose, are you proposing sectoral talks specifically on  
auto issues, and what possible kinds of benchmarks might apply there?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  I think that we're 
running ahead of ourselves.  Right now, the goal is to lay out the 
framework.  We are not going to be negotiating the specifics of any of 
these issues prior to the G-7.  Post G-7, we would obviously have to 
lay out what precise issues within each subcategory we wanted to 
negotiate, where we thought we would like to see change, and, from 
that, hopefully with Japan's cooperation, devise appropriate benchmark 
indicators.  
	     
	     Q	  But does the process -- if I could just follow up on 
that -- does the framework envision auto talks as a separate category, 
perhaps simultaneous with other talks on other topics, or, how will 
you proceed if this framework is agreed to?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Were the U.S. proposal 
accepted, there would be negotiations ongoing in each of the five 
baskets on the sectors that are contained within each of those 
baskets. 
	     
	     Q	  Have you had any response yet from Japan? 
	     
	     Q	  The Japanese government was saying yesterday, the 
Foreign Minister was saying as late as yesterday that Japan is going 

to set the negotiations any benchmarks, American benchmarks.  How 
would you respond to that
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Our negotiations with 
Japan on the framework have not yet begun, and will not begin until 
Friday.
	     
	     Q	  On that subject, I wonder why, since the positions 
are obviously so far apart and you want to have this done in something 
like 28 days, I wonder why you've gone public with a plan that 
obviously is not very close to what the Japanese would like to accept, 
and do you really think you can have a framework for the leaders to 
sign off on the 28th?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Why don't -- since we're 
going to have to leave, why don't I use this as a way of ending.  The 
fact is that -- first of all, as my colleague has said, that we 
haven't even begun negotiations, and we certainly don't intend to 
negotiate publicly.  Given that the discussions begin on Friday, we 
felt that it was only appropriate to begin to talk with you all about 
them -- the second point. 
	     
	     The third point is that we have no indication that the 
positions of that are a part as you have said -- that all negotiations 
begin with steps.  The way one proceeds with negotiations is one could 
say, put one proposal on the table and then one begins to discuss it 
and that's exactly what we're going to do. And we have a substantial 
amount of confidence, if fact, that in these periods, that in the next 
period that we'll be able to finish that.  And I wanted to thank you 
all very much.
	     
	     Q	  If two percent of GNP is your target, it's restoring 
the status quo ante of last year.  
	     
	     Q	  Would you address that?  The Japan stimulus program, 
how far will it come, in your view towards this alleged two percent 
goal?  How do we interpret what they are doing, in fact?
	     
	     SENIOR ADMINISTRATION OFFICIAL:  Well, our judgement is, 
is there is probably more macroeconomic measures they require.

                           END3:52 P.M. EDT

