A blue-ribbon task force of top-ranked Japanese and American business leaders today called for the gradual "internationalization of the yen" as part of a wide-ranging package to correct the "substantial imbalance" between the Japanese currency and the U.S. dollar.
The task force of 94 chief executives of the biggest and most important Japanese and American companies found this misalignment to be "a major contributing factor to trade conflicts between the United States and Japan."
The businessmen recommended both governments coordinate their monetary policies and use short-term intervention in the money markets to correct the wide gaps between the overvalued dollar and the undervalued yen, which hurts American exports by making them more expensive overseas and forces Japan to pay more to import raw materials because its currency is so low.
The proposal to make the yen an international currency, such as the dollar, reflects Japan's new position as a major player in the global economy. It was one of more than 40 recommendations coming from a joint task force set up as part of the 20th annual meeting of the Japan-U.S. Businessmen's Conference.
The business leaders managed to find common ground on a range of troublesome issues from questions about Japan's industrial policy to the need for more open Japanese markets for American tobacco.
But they failed to reach any agreement on increasing U.S. imports of agricultural products--especially beef and citrus--to Japan. Former U.S. agriculture secretary Orville Freeman, head of the U.S. side of the agricultural group, said the Americans and the Japanese did not even achieve "a genuine dialogue" on the differences arising from Japanese quotas on farm imports.
The task force also uncovered vast areas of misperceptions and cultural differences that accentuate the growing trade frictions between the United States and Japan, its major Pacific trading partner and ally. The Japanese, for instance, complain the U.S. system is too legalistic while the Americans found the close-knit nature of Japanese society made it hard for foreign goods to make a dent in that country's markets.
Joint trade between the United States and Japan totaled more than $60 billion last year, though frictions intensified as America's share decreased. The United States ran a $20 billion trade deficit with Japan last year. This led to charges by many American businessmen and politicians that unfair Japanese trade practices keep U.S. products from being sold as freely in Japan as Japanese products are allowed on the markets of the United States.
Today's meeting of business leaders is one of a series of conferences going on this month in an effort by both Tokyo and Washington to dampen these trade tensions.
By far the most far-reaching recommendations had to do with the yen-dollar relations.
The Japanese and the American businessmen called for jointly coordinated policies in the United States and Japan to fight big differences between the interest rates of the two countries and said that Japan should move "at a prudent but steady pace" to push the yen as an international currency. The businessmen suggested that the United States' Export-Import Bank and Great Britain's Export Credits Guarantee department use the yen for the settlement of international trade deals to speed its recognition as an international currency.