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Interview: Jacob J. Lew

Nov. 12, 2013

US Treasury Secretary Jacob Lew is travelling through Asian nations this week. He's discussing with his counterparts how they can boost regional growth, and achieve the US goal of completing the Trans-Pacific Partnership Agreement talks by the end of the year. He spoke to NHK WORLD's Reiko Sakurai during his visit to Tokyo.

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Jacob J. Lew

US Treasury Secretary

I'd like to ask you about your assessment on the US economy. You're seeing a mixed bag of data, how resilient is the US economy?

I think the US economy has shown its resilience over the last few years, and particularly in recent economic data. I think that we're seeing a lot of signs, and a lot of parts of the economy have strength, and you know, we're going into the end of the year and the beginning of next year with great optimism, that we see signs of increased growth on the horizon. The most recent data was quite encouraging and consistent with that. So you know, we've come through a very long, difficult period but I think that the policy actions taken, and the resilience of the American economy and the American people are showing through, and that's why the US growth rate is better than many other countries right now, in their recoveries, and getting better, and we still have more to do, and we're gonna keep at it because, you know, we've got a lot of people who are still looking to us to make sure that we have enough jobs for everyone who wants to work.

Still, the concerns about the US debt issue which may come up earlier next year persists, not only in the United States, but worldwide. Now, how confident are you that you can avert these issues, or stop this issue from recurring?

Coming out of this last couple of months, it is, I think, very likely that we will not see that kind of a tactic again. It's important to remember that there was never an economic crisis, it was a political crisis. I think that it was one that showed that there is no victory that comes from putting, you know, the stability of the American economy in jeopardy. I take heart from the things that I'm told privately, and from the public statements, particularly from Republican leaders, who make it clear that they've learned a lesson and that they don't want this to happen again. So, you know, we will have our differences we have to resolve, and a sometimes noisy democratic process, but that's just a tactic that just should not be used again. And I think it's important to note that in light of the uncertainty in the US economy during this period, the most recent economic data showed that core strength of the American economy is continuing. So looking to the end of the year, the beginning of next year, I hope we can avoid another incident like that, and continue to see the growth that is very achievable.

Let me then just turn to the Japanese economy. How do you assess policies adopted by the Abe administration?

I think it's very important that the Abe administration has undertaken policies to reverse a long period of deflation and economic decline. And there's much better growth in Japan but there's still more work to do, there's important reforms that need to be completed, and I think it's important as we go forward, as Japan goes forward to keep focusing on increasing consumer demand. Really stable, strong growth has to be fueled by consumer-led demand, not just exports. And, you know, we had some good discussions on those issues today.

So, how do you see the timing of the consumption tax hike, given that US notes Japan does need to boost domestic demand?

I think that, you know, a point that I've made on many occasions is that there has to be a balance between the fiscal policies and the demand policies. And I know that the government is looking at things it can do to offset some of the impact of those taxes, and the goal has to be to create more consumer demand, and to get the growth engine moving again. And that's, it's an issue for Japan, and it's also an issue in other parts of the world. That's an issue in Europe as well. The United States is a strong engine for the world economy, but it can't be the only engine. We need to have, you know, the US economy working in tandem with the other major economies of the world, where we see really growth-led demand-led recoveries that create economic activity, both for domestic and international wellbeing.

Since you mentioned other economies, let me just turn a bit to the Asian economy. I understand that you'll be traveling to other Asian economies including China. Now, are they doing enough?

You know, I think that China is meeting just this week in their third plenum, where they will be making some decisions that will be important for all of us to watch, to see how they follow through on the very positive statements that have been made about economic reform. I think that, you know, they know that they need to take actions to reform their economy, to have the kind of sustained growth that they need for the Chinese people. It is in their interest to make these reforms, and we know economic reforms are hard. We know in the United States, you know it here in Japan, it's hard in any economy to make changes. But not making changes leads to even bigger problems because economies can't prosper if you don't take the actions that you need to really build the foundation for growth in the future. So building consumer demand in China, shifting the emphasis from some of the old state-owned enterprises to an economy that is more market-oriented, these are very important reforms. So I look forward to seeing the work they do, I look forward to the conversations there, and it's important for the Chinese economy, but it's also important for the world economy.

Now, let me touch on the issues of the TPP. Now, I understand that you will be meeting all of your Asian counterparts on this issue. Now, how confident are you that the nations will be able to meet the objective, of completing the deal within this year?

Well, I think that the participants in the negotiations accept the challenge of having a high-quality agreement reached at the end of this year is a very important goal. But high quality is a very important part of that, and everyone knows that in the final negotiations in a trade agreement, the toughest issues have to be worked through. So there's still, you know, some work to do. But there are going to be technical meetings, and ministerial meetings still this year, with leadership from the United States, and leadership from Japan, and leadership from the other major economies. I'm hopeful that we can get an agreement this year. It really is very much in the interest of each of the participants, and it will do a lot to stimulate growth if we can move forward.

Could you share with us some of the conversations or exchanges you made with the Japanese counterparts on this issue?

Well, you know, I think we share the goal of completing a high-quality agreement by the end of this year, we have raised concerns about some of the sensitive issues, particularly access for goods, and I think that there are good conversations going on, and I'm hopeful that we can complete both the multilateral and the parallel discussions in the remainder of this year.

So how would you be able to persuade your Asian counterparts on this, some are still reluctant to follow through on this deal within this year.

Well, you know, I think that for each of the participants, they're involved because it's in their national interests for there to be an agreement. And I think that was true when each engaged in the TPP, it remains true today. And when it's in our collective national interests to do something like a high-quality trade agreement, I think the arguments you make at the table can be very persuasive.

Because US has been pursuing for high-level trade agreement for so many times, would you not rather rush to the conclusion without being able to implement a high-level trade agreement within this year? Would you not choose to continue the trade negotiations next year in order to achieve this?

Negotiations need to have timeframes in order to drive the process forward. It's important to complete this negotiation, but you know, we'll only complete a negotiation if it can be a high-quality agreement. So it's never been the case that there was a desire to have an agreement that didn't meet the high standards that we began with. I'm optimistic we can reach that goal, and I do think deadlines are helpful, especially when you know that in any negotiation, it's the last few weeks that are the hardest. So getting to the last few weeks has a lot to do with when you join those issues and resolve them.

Let me touch on Iran. I know that the negotiations are still ongoing, but how do you think the economic sanctions toward Iran have been working, and what's next?

You know, I think the economic sanctions on Iran, where the United States and Japan have been close partners, have been extremely effective. I think it's the reason why we're having a negotiation now where they'll be 5 plus 1 in the government of Iran, for the first time in nearly a decade, for Iran to be entertaining, making serious changes, reducing their ability to develop nuclear weapons. I think that the challenge of getting a high-quality agreement there is a high one. And we're going to push very hard to get a successful conclusion, because it would be a good thing for the world, if there can be an agreement that gives time for a final negotiation to be completed. The challenge in economic sanctions, is, for each country that's involved, to do things that actually hurt everyone's economy. And Japan's been a great partner in that, many countries in the world has, and the effect has been to do substantial, have a substantial impact on Iran's economy. And, you know, Iran is looking to have relief from that, and is doing what sanctions are really meant to do, causing them to reconsider the basic underlying policy of, you know, developing nuclear capabilities. You know, the United States has said many times, President Obama has said many times, that it's unacceptable for Iran to have nuclear weapons. And the only acceptable in-point to a final agreement is one that establishes that. We look forward to seeing what comes from the meetings, which reconvene in just a couple of weeks, of taking a first step.

Last thing-the typhoon has hit in the region of the Philippines. How is the US assisting?

Our hearts go out to the people of the Philippines. It's a terrible disaster and it's caused enormous casualties and disruption to so many people. The United States has responded immediately, both with military support that US military based here in Japan have been amongst the first to respond. We've sent already supplies to help meet some of the humanitarian needs, and will send more. We'll work together with the international community to help the people of the Philippines to recover from this terrible disaster.

Thank you so much Mr. Secretary.

Thank you.

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