January 13, 1988
President Reagan and Prime Minister Takeshita reaffirmed their support for the economic policy coordination process adopted at the Tokyo and Venice Summits. The President and Prime Minister endorsed the economic goals and policies set forth in the December 22 statement of the G - 7. They agreed that the achievement of sustained non-inflationary growth and reduced trade imbalances remains a top priority of their economic policies. They welcomed the recent actions of other industrial countries in support of these objectives, and called on the newly industrialized economies to play a more constructive role in fostering a strong world economy with reduced external imbalances.
The President stressed his determination to continue the progress that has been made in reducing the U.S. budget deficit. He indicated that the fiscal 1989 budget to be transmitted to the Congress will continue the effort to reduce the budget deficit and will meet the deficit reduction objectives established in the Gramm-Rudman-Hollings budget legislation. The President also reiterated his pledge to veto protectionist trade legislation while seeking authority for the Uruguay Round of trade negotiations.
Prime Minister Takeshita indicated that Japan will pursue economic policies to continue its strong growth in domestic demand and to reduce its trade surplus. The Prime Minister reaffirmed his commitment to carrying forward structural reform of the Japanese economy through implementation of the recommendations of the Maekawa Report and by accelerating liberalization of domestic financial markets, including deregulation of domestic interest rates. To achieve sustained growth as well as to foster exchange rate stability, the Bank of Japan agrees, under the present stable price conditions, to continue to pursue the current policy stance and to make efforts to accommodate declining short-term interest rates.
The President and the Prime Minister believe that the close coordination of their policies within the framework of the arrangements adopted by the Venice Summit is establishing the fundamental economic conditions for greater stability of exchange rates and that a further decline of the dollar could be counterproductive. In addition, they noted that their authorities are cooperating closely on exchange markets and have developed arrangements to assure the adequacy of resources for their cooperative efforts.
Note: The G-7, or the Group of Seven industrialized nations, were the participants in the annual economic conferences.