OSAKA — U.S. ambassador Thomas Foley wound up a two-day trip to the Kansai region April 24, his first since assuming the post last fall, calling on the Japanese government to deregulate further.

However, he denied a media report that he had requested that the consumption tax be lowered to 3 percent from the current 5 percent. During his visits to Kobe and Osaka, Foley met with senior local government and business officials. A native of Spokane, Washington, the ambassador also paid a visit to Nishinomiya, which has a sister city relationship with Spokane.

Touching on a recent Office of the U.S. Trade Representative report that called on Japan to take more steps to deregulate its economy before the G-7 Summit in Birmingham, England next month, Foley said that although progress has been made, more can be done.

“The U.S. believes additional deregulation commitments are needed prior to the G-7 Summit,” Foley said. In addition, Foley urged Japanese businesses not to export their way out of recession. “When I first came to Japan, I heard there was a view among some Japanese that as long as the U.S. economy was doing well, Japan’s trade deficit with the U.S. wouldn’t be a major political issue, and that it would only become one if unemployment rose. That view is false,” he said.

With mid-term U.S. congressional elections slated for November, Foley warned that a rising trade deficit with the U.S. could become a major campaign issue this fall, especially since Japan’s overall surplus with the U.S. has been on the increase since the last quarter of 1996.

“The most damaging elements politically have been the overall fall off of exports to Japan from the U.S. This is one of the reasons we are urging Japan to take further steps to deregulate. “Our concern is that Japan’s recovery needs to be based on domestic demand growth, not export growth,” Foley said.

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