May 17,2004

Grassley Encourages President to Raise Key Trade Issues With Japan at G8 Summit

WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, today encouraged President Bush to raise key trade issues with Japan at the upcoming G8 summit in Sea Island, Ga. These issues are the treatment of U.S. insurers as Japan privatizes the insurance arm ofits postal system; Japan’s continued prohibition on the importation of U.S. beef; and the need for Japan’s leadership and flexibility in advancing negotiations in the World Trade Organization to achieve trade liberalization, particularly with respect to agriculture.

The text of Grassley’s letter to the President follows.

May 17, 2004

The Honorable George W. Bush
President of the United States
The White House
Washington, D.C. 20500

Dear Mr. President:

I am writing to you with respect to the upcoming G8 summit in Sea Island, Georgia. Inaddition to providing a forum for addressing policies to foster and sustain global economic growthand development, this summit affords an opportunity both to reaffirm the importance of our bilateralrelationship with Japan and to underscore certain of our trade concerns with Prime MinisterKoizumi.

Japan’s strong support for the war on terror is greatly appreciated. Prime Minister Koizumihas demonstrated admirable vision and leadership in advancing our mutual goal of eradicating theglobal threat of terrorism. Recently, the Japanese Cabinet approved a six-month extension ofJapanese naval operations to support coalition efforts in Afghanistan. It is also reported that Japanis considering sending non-combat ground troops on a humanitarian mission to Afghanistan, similarto Japan’s deployment of non-combat troops to help stabilize the situation in Iraq. These actions arein addition to Japan’s generous financial support for reconstruction efforts in Iraq. I hope that youwill take this opportunity to express our gratitude for Japan’s valuable assistance.

Separately, Prime Minister Koizumi has embarked on a bold initiative to privatize JapanPost and “let the private sector do what it can do.” This privatization effort includes Kampo, theinsurance arm of the Japanese postal system. I strongly support efforts to privatize Kampo.However, in November 2002 I joined several other Senators in writing to Ambassador Kato toexpress some concerns about the privatization process. I remain concerned that, as the privatizationprocess continues, U.S. insurers operating in Japan may be harmed as a result of preferentialtreatment for Kampo. The Japanese Government should ensure a level playing field for all insuranceproviders as it privatizes Kampo. Japan will reap the full benefits of privatization only if theprinciple of market-based competition is adhered to. Any deviation from that principle with respectto Kampo will serve to undermine Japan’s broader effort to foster more foreign direct investmentin the Japanese economy through regulatory reform. I encourage you to share these concerns withPrime Minister Koizumi.

I also remain concerned about Japan’s continued prohibition on the importation of U.S. beef.Japan imposed this ban in response to the detection of bovine spongiform encephalopathy (BSE) inone cow in Washington State in December 2003. I appreciate the efforts that your Administrationhas made to date to reopen the Japanese market. Last month, I wrote to Vice President Cheney inadvance of his trip to Japan and urged him to raise this topic with Japanese officials. I encourageyou to raise this matter with Prime Minister Koizumi, and to empha that it is essential this issuebe resolved in a science-based manner.

Finally, I note that under your leadership, Ambassador Zoellick is engaged in acomprehensive effort to achieve progress in the Doha round of international trade negotiations in theWorld Trade Organization (WTO). His many efforts appear to be bearing fruit, as recent indicationsfrom the European Union evidence increased flexibility and a real possibility of moving forward thisyear. But the task remains daunting, and time is running short. Japan’s active leadership andflexibility are needed if we are to achieve a framework agreement by the end of July, particularlywith respect to agriculture. I hope that Prime Minister Koizumi shares your commitment to movingthe negotiations forward in a meaningful way. I encourage you to raise with him the importance ofmaking real progress in the negotiations this year, particularly with respect to agriculture.

Thank you for taking these considerations into account as you prepare for the G8 summit.

Sincerely,

Charles E. Grassley
Chairman