President Reagan and Japan's new prime minister, Noboru Takeshita, yesterday announced an arrangement to make available major new monetary assets in the battle to support the sliding U.S. dollar.
The leaders of the world's two top economic and financial powers, which together produce 40 percent of global economic output, pledged after their introductory meeting to continue coordinating their policies in the face of the sharply increased financial uncertainty of the past three months.
"A further decline of the dollar could be counterproductive," Reagan and Takeshita said in a written statement that echoed the Dec. 22 declaration of the Group of Seven -- the biggest noncommunist industrial nations.
In a surprise disclosure, the two leaders said "their authorities" have developed arrangements "to assure the adequacy of resources" for stabilizing yen-dollar exchange rates.
Officials of both governments said later that Reagan and Takeshita were referring to a previously unannounced accord that permits the U.S. Treasury to swap special drawing rights (SDRs) it holds as an asset at the International Monetary Fund for Japanese yen. Under this arrangement, up to $7 billion in U.S.-owned SDRs, an international paper currency issued by the IMF, could be transferred to Japan's IMF account. Yen would be transferred from Japan's account, and could be used by the U.S. Treasury to help support the dollar.
The unusual arrangement, which has not yet been used, had been worked out quietly by the two governments earlier this month, according to Japanese sources.
The decision to publicize the arrangement now appears to be an attempt to reassure jittery international financial markets that the two governments have found an additional way to work together for yen-dollar stability.
Yesterday's meeting and working luncheon, which lasted nearly three hours, was Takeshita's first visit to the White House and one of his most important leadership tests since taking office Nov. 6 as the successor to Yasuhiro Nakasone.
Nakasone, who served five years as Japan's political leader, had forged a personal relationship with Reagan that was an asset to him in Tokyo.
Reagan went out of his way to announce at the end of the meeting that he and Takeshita have established "an excellent personal rapport." However, the president had trouble pronouncing the Japanese leader's name (Tak-ESH-ta) on first reference before assembled reporters and photographers.
A Japanese spokesman said that during a seven-minute private Oval Office session preceding the meetings with senior ministers present, the two leaders addressed each other as "Ron" and "Noboru." Nakasone had made much of his first-name relationship with Reagan.
With Takeshita by his side, Reagan said the two leaders "found that our views on international questions coincide to a remarkable degree." Reagan said he was "particularly pleased" with Takeshita's global economic perspective, and mentioned the efforts undertaken, with U.S. encouragement, to expand the Japanese domestic economy as a way of reducing the huge trade imbalance between the two nations.
Reagan and Takeshita referred in hopeful terms to a new Japanese plan -- presented to U.S. officials Monday night, on the eve of Takeshita's arrival -- to settle a longstanding dispute over access by U.S. construction firms to participation in Japanese public works projects.
However, a senior U.S. official who briefed reporters following Takeshita's departure, described the proposal as only "a framework for productive discussions on the public works issue" and said that "it doesn't of itself resolve all the problems."
The White House official indicated that the two governments will hold additional discussions on public works access by American and other foreign firms.
Reagan said that U.S.-Japan cooperation in the national security field is "strong and growing" and praised Japan's recent decision to make a much larger financial contribution to the upkeep of the 55,000 U.S. troops stationed there.
Reagan and Takeshita expressed support for the recently concluded U.S.-Japan Nuclear Cooperation Agreement, which has run into opposition in the Senate Foreign Relations Committee and the House Foreign Affairs Committee. The leaders did not say how they would deal with lawmakers' objections that the agreement might permit airplanes bearing plutonium for Japan to fly over Alaska and western U.S. states in a potentially hazardous manner.
Takeshita said Japan's big current account surplus with the rest of the world should decrease about $10 billion this year. But U.S. officials said they have not seen an indication of a reduction in the $60 billion U.S. trade deficit with Japan.