Records of the United States-Japan Economic Relations Group

Department of State. U.S. Section of the United States-Japan Economic Relations Group:

On May 2, 1979, President Jimmy Carter and Prime Minister Masayoshi Ohira met in Washington, D.C. and agreed to establish the Japan-U.S. Economic Relations Group, informally known as the "Wise Men." This small group of distinguished persons drawn from private life would submit recommendations to Carter and Ohira for maintaining a healthy bilateral economic relationship between the U.S. and Japan.

A year prior to Ohira's Washington visit was a time of great tension in U.S.-Japan relations. Statistics showed nearly a $12 billion trade imbalance and Senator Lloyd Bentsen was speaking of import surcharges. The joint communiqué issued by President Carter and Prime Minister Ohira in May of 1979, called for a more constructive approach to U.S.-Japan economic relations.

On June 25, 1979, during President Carter's bilateral summit meeting with Ohira in Tokyo, it was announced that the co-chairmen of the Group would be the former U.S. Ambassador to Japan, Robert Ingersoll, and the former Japanese Ambassador to the U.S. and External Affairs Minister, Nobuhiko Ushiba. Based on recommendations of the respective co-chairmen, three other members were appointed to both sides. The U.S. members were: Edson W. Spencer, Chairman and Chief Executive Officer of Honeywell, Inc.; A.W. Clausen, President and Chief Executive Officer of Bank America Corporation and Bank of America; N.T. and S.A., and Hugh T. Patrick, a professor of economics at Yale University. The Japanese members were Akio Muramoto, President of Dai Ichi Kangyo Bank, Ltd., and Kiichi Saedi, President of Nomura Research Institute. Along with the eight members of the Group, each side also had an Executive Director, Jack B. Button for the United States, and Tadashi Yamamoto for Japan.

The prime objective of the Group was to focus on the longer-range (3-5 year) potential frictions in the U.S.-Japanese economic relationship. The Group researched the issues and made recommendations to avoid clashes before they occurred. They attempted to avoid involvement in shorter-range issues that were managed by the two governments. Among the issues considered were:

• (a) The role of economic issues in the overall "political- security-cultural relationship", especially Japan's emerging position as a world power, its future comprehensive economic security needs, and its involvement in foreign assistance programs.
• (b) Comparing recent trends in productivity in both countries and recommending methods for improving U.S. productivity.
• (c) Considering a paper on the "openness" of the Japanese market and recommending practical and educational measures to expand the Japanese market to goods and investments.
• (d) Assessing the Japanese complaint that their exporters were subjected to "multiple harassment" by overlapping protective devices in U.S. legislation.
• (e) Analyzing past and possible future business cycles in the two countries and examining the role that unsynchronized cycles may play in causing trade imbalances.
• (f) A sectoral trade section discussed: (1) high technology (semi-conductors, computers, and telecommunications); (2) steel; (3) autos; and (4) agriculture in an attempt to predict the bilateral trading situation that would prevail in each area in approximately five years.
• (g) Conducting case studies of U.S.-Japanese economic disputes which had developed into political conflicts in order to identify common elements in those cases and recommend procedures for better future management of similar situations.
• (h) In the energy area: (1) considering the importance of acquiring secure supplies in order to avoid confrontation over energy sources; (2) examining research and development (R and D) for creating new synthetic fuels; (3) suggesting an appropriate U.S. policy toward Japan's nuclear energy development.
• (i) Analyzing the likely course of capital movements, especially Japanese and U.S. investments, in each other's country to determine their impact on bilateral relations.

The Group actively solicited the views of the public (Congress, business, agriculture, labor, and public interest groups) to provide an additional forum for those who wished to be heard. The Group also drew upon research that was currently under way in the two countries and sponsored a modest program of separate independent research to be jointly carried out.

The Japan-U.S. Economic Relations Group submitted its final report in January 1981. Their work was completed with the publication of a supplemental report in October 1981. The group was abolished on September 30, 1981, after submitting its final report. The collection was processed maintaining strict provenance.