THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release November 20, 1998 6:05 P.M. (L)
PRESS BRIEFING BY
DIRECTOR OF ASIAN AFFAIRS FOR NSC JACK PRITCHARD,
AND DEPUTY SECRETARY OF TREASURY LARRY SUMMERS
Akasaka Prince Hotel
MR. LEAVY: For all of you who didn't get to ask questions at the press availability with the President, we've got the Deputy Treasury Secretary Larry Summers to talk about the economic aspects of President Clinton's and Prime Minister Obuchi's discussions this afternoon. And we've got Jack Pritchard, Director of Asian Affairs at the National Security Council, to talk about the security aspects of today's discussions. Jack was also part of the Special Envoy Kartman's trip to Yongbyon and can answer your questions on North Korea.
DEPUTY SECRETARY SUMMERS: The President in his speech at the AmCham this morning articulated what were the major themes in the economic areas, so I'll just be very brief in summarizing the meeting.
There were four main economic areas that were covered, all against the context of the financial crisis in Asia that has now had global ramifications. It was a very good spirit between the President and Prime Minister Obuchi in which there was a lot of emphasis back and forth on how our two countries could cooperate together to address those problems, particular around the initiative that the President and Prime Minister announced to support growth and restructuring in Asia.
Four main themes figured in the discussion -- the importance of developing an architecture that can avoid a repeat of these problems and that can contain problems most effectively when they arise, particularly in light of the enormous volume of capital flows that are characteristic of today's markets. Second, the importance of establishing a basis for growth in Japan coming from domestic demand, the need to ensure that the stimulus package that has been announced is effectively implemented and that, if necessary, is supplemented.
And the President spoke in particular about the problem of encouraging spending and getting people to spend when that was very much in the interest of the Japanese economy. The President spoke, as he did at the press conference, to the importance of the banking issue, the importance of what Prime Minister Obuchi had gotten done with the legislation, but now the particular importance of implementation going forward.
And, finally, the President discussed the range of trade issues against the context of the American commitment to keep our economy strong as a source of strength for the global economy, but at the same time the need for others to do their part. The President referenced the steel issue and the increase in imports of steel from Japan as a source of potential concern, and also laid great stress on the need for Japan to carry through on the agreements that had been entered into to ensure compliance -- referencing in particular automobiles and automobile parts, insurance, flat glass and procurement.
MR. PRITCHARD: In the bilateral meetings that the President held with Prime Minister Obuchi they led off for about 45 minutes on a discussion on security issues. In that discussion the President and the Prime Minister discussed the bilateral aspect of our security relations. A couple of things that were discussed, and that was the defense guidelines and the importance of moving forward and passing the implementing legislation. And Prime Minister Obuchi indicated that it was on track, and we're pleased with that.
The other was the SACO, or the Special Action Committee on Okinawa, that that's on track and moving forward and ultimately will lead to the relocation of Futenba Air Base -- excuse me, Futenba Marine Corps Air Station in Okinawa.
The two also talked about the Wye River agreement, in which the Prime Minister indicated he wanted to help support to maintain momentum for what the President had accomplished there, and is in the process, as he announced earlier, of pledging some $200 million to the Palestinians over the next two years.
They also spent the best part of the discussion on North Korea. And I can go into a little bit of that detail a little bit later.
The two had an opportunity at dinner last night to discuss other issues, regional issues, on Russia and China, so that was not taken up in any significant detail.
Q Can you tell us a few things about North Korea? One is the agreed framework puts certain things under observation and certain things are subject to inspections. Can you just give us a sense of which is which? And I forgot the second question.
MR. PRITCHARD: The agreed framework calls on the North Koreans to freeze their plutonium production capability at Yongbyon, a nuclear site. They have done that. There are IAEA monitors there now to safeguard and to verify the implementation of that. That's been done. We're on the verge of finishing the canning operation of the spent fuel that is stored in the ponds there. That should be done by the end of the year.
What is built into the agreed framework is the special inspections later as the lite-water reactors come on line, or about to come on line, before key or critical components go into the LWR, the IAEA must be satisfied about North Korea's compliance with the NPT. So that's the distinction now.
Q I remember the second question, which is, what were the objections that the North Koreans threw into the inspections that the President said earlier today were unacceptable?
MR. PRITCHARD: Well, now you're talking about a couple different things. You are now talking about the suspected underground construction that if our suspicions are borne out could turn out to be nuclear related, which is precisely the reason for Ambassador Kartman's trip into North Korea the 16th through the 18th of this month.
So what we're looking at is whether or not what we have seen is a violation of the agreed framework. The answer is, it is not at this point, but we certainly don't want to see anything proceed down the road that, in fact, would endanger the agreed framework.
Q So that's what the President was objecting to, was inspections on that specific --
MR. PRITCHARD: What the North Koreans have initially indicated is that to allow inspections on this particular site, this new site, they have placed some obstacles in the way for which we have found not acceptable. And that's what the President was indicating.
Q When you say it's not a violation, is that on the basis of your trip or that's what you --
MR. PRITCHARD: No, the information that we've built all along and the reason for which we are now confronting the North Koreans is the suspicions we have we want to ensure don't lead to a violation of the agreed framework. So if they continue down that road they very well could. Right now, as we said before, it is not, but we're not concerned about the technicality of the letter of the law. We have addressed this issue of our concerns with them.
Q There are some in South Korea who say that the agreed framework is -- from the standpoint of the North Koreans, site specific, and that therefore, whatever may be going on somewhere else in the country doesn't apply to the agreed framework.
MR. PRITCHARD: No, that's not accurate. The agreed framework applies to the freezing of North Koreans' plutonium production capability. So it wouldn't matter where that were occurring, if we had indications it was someplace else -- and we do not -- it would fall into that category.
Q What is the overall assessment of what North Korea is doing? Do you see the missile launch and the suspected underground site as a breakdown, or do you see them continuing to try to cooperate with South Korea, Japan and the United States?
MR. PRITCHARD: That's kind of an either-or on two extremes there. We are very much concerned about the 31 August missile launch, and that's one of the things, as the President indicated, he was here to discuss with the Prime Minister and it's high on his agenda when he goes to Korea today, and for discussions tomorrow with President Kim.
In terms of the North Koreans, they certainly, I believe, see this as the normal evolution of their own program. Missiles, as you know, are not captured within the agreed framework. They certainly don't think there is a violation; there is not, but this whole issue of what the North Koreans are doing is very much a concern to us. We don't treat it as separate issues and we are looking at the broad range of what North Korea's activities are, whether or not they have bought into the concept behind the agreed framework and the four-party talks which seeks to replace the Armistice with a permanent peace treaty.
Q -- the inability to inspect the underground site and the missile development are outside the framework, the agreed framework, what does the United States do now?
MR. PRITCHARD: One of the things when the agreed framework was developed, there was not a provision for some type of challenge inspection or verification of concerns, and so that's in fact what we're doing now. It's not that they are untouchable or outside the realm of contact, but we are aggressively engaged in discussions with the North Koreans to figure out how we can in fact satisfy our concerns -- site access and to ensure that there is not a violation or will not be a violation of the agreed framework.
Q But what's the leverage the United States has -- what can the United States threaten or offer?
MR. PRITCHARD: Well, in basic terms the leverage is the future of a relationship. The North Koreans hold very much a value to the development of a relationship with the United States. Within the agreed framework part of the objectives once it is carried out or as it is being carried out is the economic and political normalization there. We've got a series of obstacles that are not allowing that to proceed at this point. But it still -- it cannot be understated how much the North Koreans ultimately value and will depend upon a more normal relationship with the United States.
Q In these talks that you have with the North Koreans, have they made it clear -- there was a news report today that there were two new launch facilities for medium-range missiles and stepped-up short-range missiles. Have they made it clear why they have such a robust missile program? Do they maintain it's for their own security, do we suspect it's for leverage on other fronts?
MR. PRITCHARD: Well, without commenting on the specific story in mind that is coming out tomorrow in The Washington Post or today in The Washington Post, the North Koreans have contended all along that they are a small country, they have some requirements to defend themselves. They have the right, the sovereign right for the indigenous production and deployment of missiles. They certainly are a cash-strapped nation which accounts for some of their motivation for the proliferation of those things.
Q The President said that it is possible that these developments signal a more hostile attitude by the North Koreans to the rest of the world. What is your own take on that? Is that the way you see it?
MR. PRITCHARD: Well, let me suggest over the last couple of years or so we've seen things that, starting in September of '96 with the submarine incursion into South Korean territory, followed by a more recent submarine incursion, et cetera, that you would not think should be going on at this point in time. With a North Korean economy that is in dire straits, they ought to be engaged in a more productive and positive way. They're not.
There's a new, as you're well aware, a new administration in the Republic of Korea, headed by Kim dae-Jung, who is actively engaging the North. Recently Hyundai Corporation reached agreement with the North to conduct tour ships to Kunga Mountain, providing in the neighborhood of $150 million in cash over the next six years for the rights to develop that.
So you would expect that they would be more engaged on the positive side; that has not happened. They've gone through a transition over the last four years in terms of the death of Kim il-Sung, the downturn in their economy, the fall of the Soviet Union, the isolation of their traditional partners, the subsidies that they get on trade. So there's a good deal of turmoil going on at the same time that they maintain a good deal of priority and emphasis on their own military structure. That's what's keeping them afloat.
Q Can I ask you a trade question? The American delegation at APEC was clearly extremely frustrated with the Japanese position. The President's tone was different today, but conveyed the same message. Do the Japanese acknowledge the American perspective? How nasty is this going to get? And how detrimental is it at this particular time when we need cooperation between these two governments?
DEPUTY SECRETARY SUMMERS: I think the President made clear our disappointment and I think the Japanese recognized that we were disappointed, and I think understood the President's message that the United States had been a major source of strength for Japan and for other countries by accepting increased imports -- that the President thought that that was the right decision and that was policy to which the President was committed. But, at the same time, it was a policy whose viability depended upon everybody playing the rules and being committed to a market opening process.
I think, in that regard I think that message was conveyed very clearly by the President and I think it was understood by his Japanese interlocutors. I think it was clear that what happens on the APEC trade liberalization as the forum moves to Geneva and the WTO process is something that the United States will be watching very carefully -- and certainly has expectations of Japanese cooperation.
Q Given that Mr. Obuchi's hardly popular, given that the markets have reacted very tepidly to all of these stimulus factors, including the nearly $200 billion this week, why was the President's attitude, his tone, today so conciliatory? He's not popular at home. People don't think he's controlled the situation. Yet the President is saying, give the man time.
DEPUTY SECRETARY SUMMERS: Well, I think the President wasn't so much trying to reach judgments about particular political figures in particular countries. Instead, I think what the President was trying to show was his awareness of very real and important economic problems that the Japanese economy faces and awareness of the importance of maintaining confidence, recognition of the role that domestic demand and financial repair play in restoring confidence, and trying to make clear that it's not for the United States to prescribe precisely how these things should be done, only to indicate that it is very important.
I think the President was also at pains to stress -- and I think this is a crucial issue -- that this is a win-win game. The most important beneficiaries of successful economic policies in Japan will be the Japanese people, who will enjoy higher standards of living. And at the same time, we are better off if Japan succeeds and we have a larger market for our exports, a stronger market for Asian exports and a more resilient and stable global financial market. So this is something where the ends are very much in common between our countries.
Q Well, when the Americans intervened in July, he came here and talked repeatedly about a window of opportunity for change. It's now November. None of those changes have really taken place.
DEPUTY SECRETARY SUMMERS: There have been very real problems and continuing very real problems and there's been some evidence of economic deterioration in Japan. At the same time I think it's important to recognize that in the last several months several important thresholds have been crossed. There has been a commitment to fiscal expansion, including tax cuts. There has been a commitment to substantial infusion of public resources into the banking system, and a commitment to transparent examination of the banking system. Those are important commitments in the last several months.
They have meaning to the extent that they are effectively and strongly implemented, that's why the President's message was a message that was so much about the mutual importance for the Japan and for the United States of effective implementation of those commitments.
Q Does the President have confidence that the current Japanese administration has the capacity to affect a turnaround in the economy?
MR. PRITCHARD: There are no certainties ever in economic forecasting. The President believes that the framework that has been -- the policy steps agreeing -- recognizing the importance of fiscal stimulus, putting public money into the banking systems, that those are the right kinds of recognitions and what is most crucial is effective implementation. And I think he spoke both publicly and then privately of his enormous respect for what the Japanese people had accomplished economically over the last 50 years, and that that economic strength speaks very well to the potential of the Japanese economy for the future.
Q The President has expressed concern about the United States falling back into a protectionist stance. Can you explain a little bit about why he's concerned about this, how much he's concerned about it and how he pressed this with the Prime Minister behind closed doors as well as publicly?
DEPUTY SECRETARY SUMMERS: The concern is that at a time when U.S. economic strength is leading us to accept substantially increased imports from other countries, inevitably that process is associated with certain dislocations in sectors of our economy that are accepting increased imports. That's part of a dynamic economy. But what the President made clear was not something that the United States could or would sustain was trade that was not by the rules, nor would we want to see a situation in which the United States was the importer of only resort, a situation where other countries were not doing their part to grow and accept imports from the countries that were in very serious difficulty. That is the right economic policy in the United States and it's an economic policy that corresponds to political reality.
What he emphasized was that he was prepared to lead the United States economy in being an engine for the rest of the worlds, but rules had to be followed and others had to do their part. And in that context he referenced the steel question and he referenced the question of agreement -- carrying through on the various agreements in flat glass and insurance and the other products.
Q Privately, did Prime Minister Obuchi respond to this? DEPUTY SECRETARY SUMMERS: I think the Prime Minister made it clear that he understood that Japan had to do its part, but they didn't get into a specific case-by-case discussions in each of the areas. But I think the Prime Minister understood very clearly and could see the point that the President was making.
Q Did the President refer to any specific industries besides steel, and what response did he get the Prime Minister on the steel question?
DEPUTY SECRETARY SUMMERS: He referred to the list of industries I went through.
Q No, I'm not talking about the ones where you've already reached agreement, but other issues --
DEPUTY SECRETARY SUMMERS: He didn't, that I recall, refer to other industries outside of the ones where we needed -- where the enforcement issues were crucial. And I don't think that there was a specific commitment from the Prime Minister. But I detected from the various conversations I've had and I think others in our delegation have had an awareness here of the importance of making sure that trade is by the rules in steel and other sectors.
Q It sounds like the President and Prime Minister talked about a wide variety of topics. And I was wondering whether either man brought up the subject of the impeachment inquiry? And secondly, given the fact that that inquiry that the start of the hearings have generated a tremendous amount of coverage and controversy in the states, has that provided even a minor distraction to the agenda here in Tokyo?
DEPUTY SECRETARY SUMMERS: In none of the meetings in which I was a participant was any subject of that kind touched on. And I have not heard any reports of it being touched on in any of the other sessions. Barry Toiv may be able to give you a fuller readout.
I've by now been on a lot of trips with the President and this one was like the others in his being very focused on the task at hand, having quite extensive briefings in which in a number of questions he revealed by his question that he knew more about the subjects at issue than those of us who were briefing him. So this certainly was not something from the discussions of the party on the trip one was aware of any distraction.
Q Mr. Summers, private economists have forecasted that even with the stimulus package the Japanese economy will shrink next year. Do you agree with that assessment and is that why President Clinton keeps saying that this may not be enough?
DEPUTY SECRETARY SUMMERS: I think the recognition that there is a risk of slow or negative growth is why there's a view that it may be necessary over time to do more. I don't have a specific forecast of the Japanese economy to offer.
Q Can you please tell us whether or not there is any sort of resolution on the steel issue? In the past the Japanese have denied that there is any dumping.
DEPUTY SECRETARY SUMMERS: I don't have any judgment to express on the question of whether there is or is not dumping by the legal standard for that. That's something that adjudicated in a different way. I do feel that the concerns that were being expressed about, as the President said at the AmCham today, the 500-percent increase were very clearly heard -- let me just say that.
Q One question for Mr. Pritchard. Can you tell us if there was any discussion about Taiwan, either with respect to Japan's unwillingness to give the three no's assurances that -- or with respect to missile defense or the defense guidelines?
MR. PRITCHARD: As I indicated before, the President had an opportunity at dinner last night, sitting side by side with the Prime Minister, and they did discuss China. I cannot tell you whether or not Taiwan or theater missile defense had come up.
Q Can I ask another Korea question? Can we go back -- at some point -- what's the next step? Will there be talks again in Geneva, for instance, or have be basically said until we hear more about this site we will have no more conversations there?
MR. PRITCHARD: No. We are actively pursuing -- one of the things that at the end of the discussions in Yongbyon we agreed we would continue this discussion -- we've got a target date of probably around the first week in December. But there are some details that have to be worked out -- exactly where this is going to be held and whatnot. But we are actively pursuing this and the North Koreans have received the very serious message that we took to them.
Q Is Bill Perry going to go to North Korea and talk to the North Koreans? Or what's the nature of his role that the President mentioned?
MR. PRITCHARD: Right now, as the President indicated, Dr. Perry will come on board to help conduct an overall review of our North Korea policy, taking into stock kind of offset for what's needed and going on -- details, talking with our allies in South Korea and Japan. Kind of following exactly what the President is doing now. He's come to Japan, he's talking with the Prime Minister, he's going on to South Korea tomorrow to discuss that. The Prime Minister recently had a state visit by President Kim in South Korea. President Jiang Zemin is coming here as well.
So you've got a series of these leaders talking and they're talking very focused on the North Korean policy.
Q Thank you.
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