Trade Is Answer to Wage Woes, President Says

Declaring that expanded world trade “is the answer to 20 years of stagnant wages for the hard-working middle class,” President Clinton vowed Friday that the United States will remain engaged overseas, but warned that Americans will not “bear the cost” of world leadership if they are shut out of the economic benefits of growth and stability .

In one of the most complete explanations of his views on the relationship between economic revival and foreign policy, Clinton for the first time publicly stated what Administration officials often have hinted privately: He will try increasingly to focus U.S. foreign policy on Asia, the Pacific region and Latin America, rather than on Europe--the traditional preoccupation of U.S. policy-makers.

“Europe remains at the core of our alliances,” Clinton said, but “we must focus our global initiatives on the fastest-growing regions” of the world--Latin America and Asia.

At the same time, Clinton delivered a blunt warning to Asia’s largest economic power. Speaking shortly before a meeting with Japanese Prime Minister Morihiro Hosokawa, he said Japan must take further steps to stimulate its sluggish economy.

The United States, Clinton said, has responded to international calls to reduce its budget deficit and “to contribute to global growth by showing some discipline here at home.”

“Now we must get our partners in Europe and Japan to also follow strategies that will promote global growth,” he said, adding that “much of our trade deficit problems today are the result directly of slow economic growth abroad.”

The Administration has been pushing Japan to cut its income tax and take other steps to stimulate its economy, moves that Tokyo’s conservative-minded Finance Ministry has resisted.

In their closed-door meeting later in the day, however, Clinton received little reassurance from Hosokawa that an economic stimulus package will be delivered soon. Hosokawa stressed to Clinton that he is in the midst of a difficult fight over political reform proposals that passed the lower house of the Japanese Parliament on Thursday but which still face opposition in the upper chamber.

Until that fight is over, Hosokawa indicated, he will try to avoid controversies over either economic stimulus or imports of American agricultural commodities.

“It’s his NAFTA,” a senior White House official said, referring to the importance of the political reform fight for Hosokawa. “He can’t do much else until it is finished.

“Reading between the lines, we think they (the Japanese) will be responsive,” the official added. “But if the question is, ‘Did he say anything about I’m going to solve your problem?’ No.”

For now, the Administration appears willing to accept those assurances. Clinton invited Hosokawa to meet him again in Washington on Feb. 11--a date that will become a deadline for resolving several outstanding U.S.-Japanese trade issues. And at a news conference after their meeting, Clinton said he believes that Hosokawa is sincere about wanting progress.

Asked about past Japanese intransigence over trade issues, Clinton said Hosokawa’s is “a different government and a different time, with, I think, different objectives.”

“They are working on their political reform agenda now. And I think they will conclude it soon,” Clinton said. “After that, I believe Prime Minister Hosokawa will move seriously on the two great economic issues that we share in common”--the need to spur international economic growth and the U.S. desire to reduce Japan’s trade surplus.

At the news conference, Clinton also defended his policies toward North Korea, whose potential development of nuclear weapons was a major topic of his talks with both Hosokawa and Chinese President Jiang Zemin. Administration officials have emphasized diplomatic efforts to prod North Korea into allowing international inspection of its nuclear power facilities but have suggested that they would seek sanctions against North Korea if it fails to comply soon.

“We are worried about the deteriorating capacity to monitor developments in North Korea in the nuclear industry,” a senior Administration official said in a briefing for reporters after Clinton’s talk with Hosokawa. Existing monitoring equipment placed by the International Atomic Energy Agency can continue working for only a few more weeks, officials have said.

“I know there are those who think we should have taken a different course,” Clinton said, referring to critics who believe that the Administration should have threatened sanctions or possible military action already. “But I would remind you that South Korea, Japan and China are intimately interested and personally affected” by U.S. policy toward North Korea.

Those three countries “are worried about whether sanctions would backfire,” Clinton said, adding that “we have discussed with them some other options, perhaps taking a more comprehensive approach to all the differences” with North Korea “in an attempt to demonstrate again to North Korea that they have nothing to be afraid of.”

Despite the discussions of North Korea, both Clinton’s speech and his meetings with Jiang and Hosokawa provided a clear illustration of the central thrusts of the Administration’s policy toward Asia--a focus primarily on economics, rather than military and security issues.

“More than ever, our security is tied to economics,” Clinton said in his speech. “Military threats remain, and they require our vigilance and resolve. But increasingly, our place in the world will be determined as much by the skills of our workers as by the strength of our weapons.

“For the first time in this century, no great military rivalry divides the Asia-Pacific region,” Clinton said. The Asian nations “have gone from being dominoes to dynamos,” he said--a reference to the “domino theory” enunciated during the Vietnam War era.

The speech, delivered to a business group here, was one of Clinton’s most passionate and extended the defense of a theme he has stressed through much of the autumn: that in an increasingly global and competitive economic climate, guaranteeing future prosperity has replaced combatting communism as the central organizing principle of U.S. foreign policy.

Instead, he said, “a new global economy of constant innovation and instant communication is cutting through our world like a new river, providing both power and disruption to the people and nations who live along its course.”

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