Foreign Relations of the United States, 1969–1976, Volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972

95. U.S. Position Paper¹

Washington, undated.

U.S.-JAPAN TRADE ISSUES

1. Overall Trade Imbalance

The U.S. has requested that Japan take action to reduce its trade surplus with the U.S. by at least $1 billion in each of the next two years. What we would like is for Japan to reduce from the present anticipated surplus of $3.6-$3.8 billion by $1 billion, to be achieved by March 31, 1973-the end of Japan’s current fiscal year. Then, in the next fiscal year, we would like Japan to reduce the surplus by a further $1 billion.

2. Increased Purchases over JFY 71

We desire that the Japanese government undertake to ensure this in part through an increased level of purchases as follows:

(a) Agricultural purchases: Japan has projected an increase of $270 million of purchases. We seek information detailing the components of this category, and to develop language for a commitment. In addition, Japan agreed to make $50 million additional purchases for food agency account. We seek information detailing the components of this category, and to develop language for a commitment; and would like to receive a commitment for another $100 million which might include long staple cotton.

(b) Forestry and fisheries: Japan has projected an increase of $120 million of purchases. We seek information detailing the components of this category, and to develop language for a commitment.

3. Enriched Uranium Purchases

The three aspects of this category are subject to discussion by a Japanese team with Atomic Energy Commission officials. We request that the Japanese team arrive in the U.S. as soon as possible.

(a) Enriched Uranium: The Japanese have agreed to purchase $160 million of enriched uranium (5,000 special working units). Details to be worked out by U.S.-Japan discussion in the near future. U.S. could supply up to 10,000 special working units, and we would hope that the purchase could approach this amount.

(b) Uranium Ore: The Japanese have agreed to $200 million purchases, providing the U.S. price is competitive. Details to be worked out by U.S.-Japan discussions in the near future. (This $200 million figure covers twice the ore necessary for the 5,000 SWU’s).

(c) Enrichment Facilities: A letter of intent is sought between the two governments to approve the principle of a joint-venture enrichment facility and encourage the respective country’s private companies to proceed to work out a program.

4. Commercial Aircraft Purchases

The U.S. seeks assurances of the Japanese to facilitate by financial and other measures the purchase of at least $150 million of commercial aircraft by private companies.

5. Liberalization Measures

The following measures were agreed upon and require written commitments from the Japanese government:

(a) Retailing: It was agreed that 100% U.S.-owned retailers could operate in Japan with up to 11 branches. The key element is the definition of the U.S.-made products required for 50% of sales. The language for the commitment is agreed and we are awaiting this letter.

(b) Processing and Packaging: Liberalization was agreed on U.S. bulk imports by Japan, particularly cosmetics, film (except color and color-sensitive paper), and pharmaceuticals. The language for the commitment is agreed and we are awaiting this letter.

(c) Computers: It was agreed that the U.S. share of the Japanese computer market could rise from 46% to 50%. Also imports of parts and peripherals were to be liberalized to allow Japanese and U.S. firms to import with fewer restrictions. The language for the commitment is agreed and we are awaiting this letter.

(d) Government Procurement: The Japanese maintain they have no “Buy Japan” requirements, except on computers and nuclear reactors. A written communique by MITI to government agencies or a written commitment in another form is needed.

6. Defense Procurement

While this issue would not be raised publicly or announced, a private commitment is sought to increase such purchases from the U.S. from a level near $200 million per year to $300 million to $400 million per year.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Country Files—Far East, Box 538, Japan Volume 8 5-12/72. Confidential. Attached to an August 15 memorandum from Hormats to Haig indicating that the paper was a “final agreed position paper” and recommending that Haig send it to Holdridge and Ingersoll in Tokyo, because “it is a clear and accurate representation of the U.S. position.” Haig approved that recommendation, and a telegraphic text of the message was sent from the White House to the Embassy in Tokyo at 0104Z on August 16. (Ibid., VIP Visits, Box 926, Tanaka 8/31-9/1/72)