Office of the Press Secretary
For Immediate Release November 20, 1998
6:05 P.M. (L)
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
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
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
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
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
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
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
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
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
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
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
So you've got a series of these leaders talking and they're talking
very focused on the North Korean policy.
Q Thank you.
END 6:26 P.M. (L)
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