Businesspeople from the United States and Japan released a joint statement Tuesday urging Tokyo to swiftly adopt measures to restore the stability of, and confidence in, the Japanese banking sector, as well as to bolster domestic demand through tax cuts and deregulation.
The statement was adopted at the 35th annual Japan-U.S. Business Conference, which ended Tuesday in Tokyo amid the prolonged economic recession in Japan and the rest of Asia.
The topic of how the Asian economy should be revitalized dominated most of the discussions during the three-day conference. “The statement reflects a sense of urgency felt by the private sector in both Japan and the U.S. at a time when Japan is in a serious economic slump and when a power shift in the government is about to take place,” said Minoru Makihara, a chairman of both the Japan-U.S. Business Council and Mitsubishi Corp.
According to the statement, Japan should take aggressive action to remove bad loans from banks’ balance sheets, and other appropriate measures to restore the health of the financial system, including implementation of the earlier announced “Total Plan.”
At the same time, it calls on Japan to quickly undertake a comprehensive reform of the tax system, including permanent corporate and personal income tax cuts and the institution of consolidated taxation, to encourage the effective and efficient use of holding companies.
While the statement also urges Tokyo to continue deregulation and market-opening efforts, it notes that a review of fiscal spending should be conducted to enable the most efficient use of public funds.
The joint statement, however, does not touch on the recently rising U.S. trade deficit with Japan. “The clearly rising trade deficit can be a political problem in the U.S., but I think the leadership in our country can defend the current situation as we see vigorous actions taken in Japan along the lines of the recommendations,” said Michael Jordan, a chairman of both the U.S.-Japan Business Council and CBS Corp.
The statement also calls on the U.S. and Japanese governments to continue to explore ways to alleviate the Asian financial crisis, and urges them to provide continued trade and financial assistance to the region through bilateral and multilateral channels.
On global warming, Japanese Chairman Makihara said that it was by far the toughest issue for reaching a common position because of the wide positional gap separating the U.S. and Japan. While acknowledging the need to cope with the problem, the U.S. side insisted during the conference that there was not yet enough scientific evidence and that further discussion of the issue should require more effort by the developing nations.
On the other hand, Japanese businesspeople indicated they were more committed to the issue.
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