Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

59. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter¹

Washington, September 24, 1977

SUBJECT

• Letter to Prime Minister Fukuda

1. Prime Minister Fukuda sent you a copy of his statement announcing the Japanese expansion program.² He probably expects a reply.

2. We now have the Treasury analysis of the Japanese expansion package: It’s great on growth (permitting Japan to hit its Summit target of 6.7%), and weak in reducing the external surplus.

3. Hence the attached proposed letter, which gives the Japanese well deserved praise on growth, and an equally well deserved prod on the surplus. (The Japanese have just announced some limited initial measures to cut that surplus.)³

4. I have cleared it with State (Dick Cooper, who is just back from Japan and believes a letter should be sent), and Treasury (Tony Solomon).

RECOMMENDATION

That you sign the letter to Prime Minister Fukuda at Tab A.⁴

Tab A

Letter From President Carter to Japanese Prime Minister Fukuda ⁵

Washington, September 26, 1977

Dear Mr. Prime Minister,

Thank you for sending me your statement concerning the new Japanese economic expansion measures. On preliminary analysis, these measures look very promising; I am glad that your government has acted vigorously to fulfill its Summit commitments regarding growth. We have our London Summit growth commitments very much in mind; the United States should reach its growth target this year.

We remain concerned, as you know, by the size of Japan’s external surplus. I welcome the indications at the recent US-Japanese sub-Cabinet meeting that your government shares these concerns and will seek actively to reduce that surplus.⁶ I have just learned that some initial steps have been taken to this end. Further substantial progress would make it easier to resist growing protectionist pressures in the United States and other countries. It would enable Japan to play its appropriate role in promoting world recovery and strengthening the international financial and trading system.

I hope that our two governments can continue to stay in close touch, in concerting their policies to achieve steady non-inflationary growth and an open world trading system, and that you will write me whenever you feel that an exchange of views between us would serve these ends.

Sincerely,

Jimmy Carter

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Country Chron File, Box 24, Japan: 9–12/77. No classification marking. Sent for action.
2. Owen sent a copy of Fukuda’s September 3 statement to Carter under cover of a September 8 memorandum. (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 64, Summits: 5–12/77)
3. Telegrams 14536 and 14731 from Tokyo, September 20 and 22 respectively, provide details on these measures. (National Archives, RG 59, Central Foreign Policy File, D770341–0588 and D770344–1336) In the September 23 Evening Report to Carter, Christopher noted that implementation of the measures “will come only after difficult domestic discussions, and the effect on the surplus is likely to be temporary. We will, therefore, continue to press Japan, both bilaterally and in the multilateral trade negotiations, to reduce its surplus, and we will consider tougher approaches if necessary.” Carter underlined the phrase “continue to press Japan” in Christopher’s report and wrote “good” in the adjacent margin. (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 19, Evening Reports (State): 9/77)
4. Brzezinski wrote “Concur, Z.B.” below the recommendation.
5. No classification marking.
6. See Document 55.