Japanese Prime Minister Takeo Fukuda began a two-day summit session here yesterday morning by telling six Carter administration cabinet officers that they must succeed in controlling inflation and reducing energy consumption to protect the value of the dollar.
In an extraordinary breakfast meeting at Blair House, the 73-year-old Japanese leader said he was "committed" to reducing the $20 billion Japanese trad surplus by trimming exports and incrasing imports.
But the American officials - in a 90-minute conversation one of them said "was not bashful on either side" - pressed Fukuda to improve Japan's multilateral trade concessions, take additional steps to trim its surplus and accelerate its domestic growth rate. Fukuda will meet with President Carter this morning.
Japanese-American relations have been in a critical phase for about a year, largely because Japanese exports to the U.S. of steel and consumer products such as television sets, have increased sharply, while rigid Japanese import barriers have prevented significant penetration of their markets by U.S. firms.
Thus Japan has been running a trade surplus of about $10 billion with the United States. In a negotiation completed in January between Special Trade Representative Robert Strauss and special ambassador Nobuhiko Ushiba, the Japanese pledged steps to boost their economic growth rate to 7 percent and to facilitate additional imports that would diminish their surplus.
In Japan, Fukuda's willingness to meet American demands has brought intense criticism from Japanese interests - especially agricultural interests - that would be hit by larger American imports.
Fukuda said at the Blair House meeting that, despite worldwide skepticism, he is optimistic about achieving a 7 percent real growth rate this year. American officials observed they were pleased that the 7 percent figure is now taken as a target and not a forecast.
But the Japanese prime minister conceded to his top-level American audience that a high growth rate alone won't cut the Japanese current account (trade and services) surplus, now estimated at $14 billion. He said that Japan must increase its imports even beyond a level that would be triggered by a 7-percent-expanded economy, and that, despite political heat at home, he was committed to this policy.
To a group of columnists with whom he met later, he said: "I am beating my brains" to improvise ways to increase Japanese imports.
Fukuda later met separately with Federal Reserve Chairman G. William Miller and then with Secretary of State Cyrus Vance in a session that was largely ceremonial. But Fukuda will raise political issues in his meeting with President Carter.
Primarily, Fukuda intends to express the general concern prevalent in Asia that the U.S. has lost interest in that area of the world in the wake of its exit from Vietnam and proposed troop withdrawal from South Korea. American officials said that Fukuda would be reassured that the U.S. has a continuing interest in the security and economic stability of Asia.
Economic issues, of couse, also will be on the Carter-Fukuda agenda in what shapes up as a preliminary to a seven-nation economic summit scheduled for Bonn July 16 and 17.
American sources said the Blair House session might have proved to be tense were it not for the recent improvement in the position of the dollar. From the standpoint of the Japanese, further depreciation of the dollar - meaning additional appreciation of the Japanese yen - would work a hardship manufacturer's, especially those producing for sales abroad.
Treasury Secretary W. Michael Bluemnthal, acting as spokesman for the American group, responded to Fukuda's comment on the dollar by saying the United States is committed to dealing with "the fundamentals" - that is, by controlling inflation and making every effort to get meaningful energy legislation through Congress. He promised, as well, that the U.S. will intervene to prevent "disorderly" exchange markets.
He then introduced Economic Council Chairman Charles Schultze, Energy Secretary James Schlesinger, Commerce Secretary Juanita Kreps, and Strauss - each of whom talked about problems in his or her own areas.
Strauss told Fukuda that Japan should improve its offers of trade concessions at multilateral negotiations taking place in Geneva.
Fukuda distributed to the statistical comparisons to the American group designed to show that Japanese economic growth and price performance werer better than that of the United States, and that the volume of most major exports to the United States is trending down, and that auto exports are not increasing.
Strauss, who met separately yesterday with Ambassador Ushiba, later told a Chamber of Commerce audience has was convinced that the Japanese government "is trying hard" to meet its pledges, "But we've got to make them try harder."